US auto tariffs to further strain ties with Europe

US President Donald Trump's decision to impose 25 percent tariffs on all imported automobiles starting in April will further strain relations between the United States and Europe while disrupting global supply chains and hurting US consumers, according to policymakers, industry leaders and economists.

Leaders of major powers in Europe, including European Commission President Ursula von der Leyen, France's President Emmanuel Macron, and Germany's Chancellor Olaf Scholz were quick to criticize the US move as wrong and regretful, urging Trump to reconsider.

As Europe's largest car exporter to the US, Germany stands to be one of the most affected by the new tariffs. According to the German Association of the Automotive Industry, the total value of exports of the German automotive industry was 279.8 billion euros ($301.7 billion), and the US represents a share of 13.1 percent.

Scholz said the US was "embarking on a path that will only end with losers. Because tariffs and isolation cost prosperity for everyone."

Michael Schumann, chairman of the German Federal Association for Economic Development and Foreign Trade, said the tariffs by the Trump administration targeting automobiles produced outside the United States is "another step away from rational economic policy and toward politically motivated protectionism".

"A 25 percent levy on foreign-made cars will neither solve structural trade imbalances nor revitalize American industry in the long run. It will, however, strain transatlantic relations and disrupt an already fragile global trade environment," Schumann told China Daily.

"The tariffs may offer short-term political wins, but come at the cost of long-term economic cooperation, innovation, and consumer welfare. Rather than resorting to economic nationalism, major economies should be working together to reform multilateral trade frameworks, encourage reciprocity and promote sustainable investment," he added.

At a news conference on Thursday, Macron said: "Imposing tariffs disrupts value chains, creates an inflationary effect in the short term and destroys jobs. So it's not good for the US or European economies."

Macron also questioned the timing of the move. "At a moment when President Trump is asking Europeans to make a bigger military effort to ensure our own security, it's not the moment to impose tariffs on us — that's not coherent," he said.

In a statement issued on Wednesday, von der Leyen said the automotive industry has deeply integrated supply chains on both sides of the Atlantic and therefore tariffs are "bad for businesses, worse for consumers equally in the US and the European Union".

Dialogue urged

Sigrid de Vries, director-general of the European Automobile Manufacturers' Association, said: "The EU and the US must engage in dialogue to find an immediate resolution to avert tariffs and the damaging consequences of a trade war."

De Vries pointed out the negative impact of tariffs not only on global automakers but also on US domestic manufacturing — because tariffs on imported automotive parts will hurt automakers producing cars in the US for export markets too.

The United Kingdom, however, signaled it would not retaliate to the tariffs, as Prime Minister Keir Starmer said on Thursday: "We are engaged in intense discussions with the US on economic arrangements on a number of fronts, including to mitigate tariffs."

"I think that rather than jumping into a trade war, it is better pragmatically to come to an agreed way forward on this if we can," he added.

Max Yoeli, a senior research fellow with UK's Royal Institute of International Affairs, also known as Chatham House, said economists broadly agree that Trump's tariffs will become "taxes on imports paid by US businesses and consumers" and therefore lead to higher prices and slower growth in the US.

"Sharp consequences are already visible as investors begin to question US economic exceptionalism," Yoeli said in a commentary published on Wednesday.

"The president promises that trillions in revenue and unprecedented job creation will make 'a little disturbance' worthwhile. Yet, tariff policy is undercutting both his stated economic priorities and America's economic strengths."

XING YI in London

xingyi@mail.chinadailyuk.com