If You Think Trump’s China Policy Is Tough, Wait for Car Tariffs
President Donald Trump’s threat to restrict foreign car imports would have a greater effect on the global economy than the U.S.-China conflict, according to World Trade Organization Chief Economist Robert Koopman.
“Let me suggest a back-of-the-envelope calculation,” Koopman told reporters on Tuesday in Geneva. “U.S.-China trade is about 3 percent of global trade. Automobile trade globally is about 8 percent of global trade. So you can imagine that the impact of automobile tariffs are going to be bigger than the impact of the U.S.-China trade conflict.”
Koopman’s comments come as the WTO slashed its global trade growth projection for 2019 to the lowest level in three years, citing the impact of rising commercial tensions and tariffs.
Trump is currently mulling tariffs, quotas or other restrictions on imports of autos and automobile parts following the completion of a U.S. Commerce Department national security investigation. The inquiry is identical to the process the U.S. pursued for metals last year, after which it implemented 25 percent duties on steel and 10 percent tariffs on aluminum.
Trump agreed in July to hold off on car levies while the U.S. and European Union negotiate an agreement to reduce tariffs on each others’ goods. But U.S. trade officials are frustrated with the lack of progress in the talks, with U.S. Ambassador to the EU Gordon Sondland saying in a February interview that “so long as the EU leadership plays the delay game the more we will have to use leverage to realign the relationship.”
©2019 Bloomberg L.P.