U.S. President Donald Trump has threatened to impose a 20% tariff on all imported European cars.
“Based on the Tariffs and Trade Barriers long placed on the U.S. 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 U.S. Build them here!,” Trump tweeted.
Trump is floating the tariff proposal after the European Union imposed duties on several U.S. products, including Harley-Davidson motorcycles and bourbon whiskey.
According to CNN, the automakers that would be hit the hardest by the tariffs already build many of their vehicles in the United States. German carmakers Volkswagen, Mercedes and BMW have plants in the southern region, which employ more than 20,000 workers. Volvo is now producing vehicles out of its plant in South Carolina.
The vehicles produced in the U.S. would likely be unaffected by the tariffs, but these automakers often import some of the vehicles they sell in America from Europe. The 20% tariff, it is speculated, may wind up raising vehicle prices by that amount.
According to the Peterson Institute for International Economics, as many as 195,000 workers could lose their jobs over the next three years if demand for imported vehicles slows due to the tariffs. That equates to about 2% of the workforce in the auto and auto parts industries in the U.S.
If other countries retaliate and impose tariffs on similar products, an estimated 624,000 jobs may be in jeopardy.
Japanese automakers employ 92,000 workers in factories and 350,000 jobs through dealer networks. German car makers employ over 36,000 in the United States.
Stocks and indices wavered throughout the week on news of the tariffs and Trump’s inquiry to identify $200 billion in Chinese goods that would be penalized by tariffs.
The Dow fell eight straight sessions through Thursday, markings its longest string of declines in more than a year.
On Friday, the Dow recovered slightly, rising 119.19 points, or 0.5%. For the week, the Dow was down 2%, or 509.59 points.
The S&P 500 added 0.2%, or 5.12 points, to reach 2754.88 on Friday, but fell 0.9% for the week. The Nasdaq fell 0.7% for the week and slumped 20.13 points on Friday.
Industrial shares in the S&P 500 rose, but still posted weekly declines. Boeing lost 5.3% and Caterpillar fell 6.7%.