Trump threatens to slam a massive tariff on European cars

Carlos Barria/Reuters

U.S. President Donald Trump reacts as he sits on a truck while he welcomes truckers and CEOs to attend a meeting regarding healthcare at the White House in Washington, U.S., March 23, 2017.

• President Donald Trump threatened to impose a 20% tariff on imports of cars from the European Union.
• The move would be a huge escalation of Trump's ongoing trade conflict with the EU.
• Trump already hit Europe with steel and aluminum tariffs, angering EU leaders and triggering retaliation.

President Donald Trump on Friday threatened to slam huge tariffs on imported cars from the European Union, a massive threat in the escalating trade conflict between the allies.

Trump had directed the Commerce Deparment to launch an investigation into imported autos in May, similar to the procedure that led to the steel and aluminum tariffs. While the results of that investigation are still weeks away, Trump raised the specter of tariffs on Twitter.

"Based on the Tariffs and Trade Barriers long placed on the US and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the US," Trump tweeted. "Build them here!"

Trump has long been fixated on imported cars. Former Trump adviser Gary Cohn recounted a story during a recent panel in which Trump asked why all cars in the US weren't made domestically.

Such a move would be a massive escalation of the already intense trade fight between the US and Europe. Leaders from the UK, Germany, and France slammed Trump's decision to hit the EU with steel and aluminum tariffs and the bloc responded with tariffs of their own.

In total, the US imported over $43 billion worth of vehicles for the transportation of people in 2017. So the size of the tariff would dwarf the steel and aluminum tariff, which hit a little over $7 billion worth of EU exports to the US.

European car manufacturers including BMW and Mercedes Benz have a large presence in the US. In fact, in September Mercedes announced that the company was investing $1 billion in their Alabama plant.