There are major disruptions going on in the automotive industry, including electrification and autonomous vehicles, that are essential to driving the industry into the future. But European car makers are raising concerns over the increased geopolitical tensions resulting from the threat of a trade war.
CEOs at the Geneva Motor Show told CNBC these were the two biggest unknowns facing the automotive industry right now.
“It is a critical situation for us,” Herbert Diess, the CEO of VW Group, which comprises Porsche, Audi and Seat among other brands, told CNBC Tuesday. “Mostly, our premium brands here in Germany are depending on the import market of the U.S. Audi and Porsche have significant market share there, so this is a threat,” he said.
The Trump tariffs
Tensions began growing last year after Trump imposed tariffs on solar cells and some washing machines from China, and then on steel and aluminum imports. The U.S.-China trade squabble turned into an escalating back-and-forth game with both sides imposing tariffs worth billions of dollars on each other.
In August 2018, Trump announced he would put a 25 percent tariff on every car import from the EU, something that would be disastrous for the industry, not only in Europe but in the U.S. More recently, in late February this year, Trump renewed his threat, saying,”We’re negotiating. If we don’t make the deal, we’ll do the tariffs.”
Of course, Trump made the statement just one week after the U.S. Commerce Department report has concluded that American auto imports threaten national security. This determination is based on section 232 of the U.S. trade law. Most critics agree that this is part of Trump’s tactics – using tariffs and tariff threats to try to extract broader trade deals.
The EU Trade Commissioner, Cecilia Malmstrom will be meeting U.S. Trade Representative Robert Lighthizer on March 6 in Washington D.C. and the Secretary-General of the European Commission, Martin Selmayr, will meet the Director of the United States National Economic Council Larry Kudlow on March 7.
“The discussions will focus on the next steps toward the implementation of the July 2018 Joint Statement and on the EU-US cooperation on World Trade Organization reform and level playing field issues,” Commission spokesman Margaritis Schinas said of this week’s talks.
