Officials from the EU, Japan, South Korea, Canada and Mexico convene today to plan their response to potential US auto tariffs. While Washington has not enacted sweeping levies on imported vehicles, a national security inquiry targeting auto imports launched in late May.
The US used national security arguments to justify its steel and aluminium tariffs in March, a move that shocked its allies and trading partners worldwide. Key auto manufacturing nations are seeking to avoid another blow in the building trade war.
Having accounted for nearly a quarter of global auto imports in 2017, the US is by far the world’s largest auto importing market. Substantial automotive import duties of up to 25% could thus shake the global market considerably.
Expect today’s meetings in Geneva to appease the US with a multilateral slashing of American auto export tariffs. This preemptive move could avoid further escalating tensions between the US and its allies—the US would have little to gain from a protracted dispute after already receiving major concessions.
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Josh analyses the economic impacts of geopolitical developments in emerging economies. He contributes regularly to The Daily Brief.