Trump's proposed tariffs could cut German car exports to U.S. by half

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BERLIN — Proposed 25 percent import tariffs on cars by the United States could cut German car exports to the U.S. by 50 percent in the long-term and heavily affect exports to other countries, a study by the German Ifo institute showed on Friday.

"These tariffs would cut total car exports from Germany by 7.7 percent, which would amount to 18.4 billion euros," Gabriel Felbermayr, foreign trade expert at Ifo, said in a statement.

The U.S. Commerce Department is set to meet a Sunday deadline to deliver its recommendations to President Donald Trump on whether imported vehicles and parts pose a national security risk, and to outline options on how to address the issue, officials said on Thursday.

Trump would then have 90 days after Commerce's recommendation to decide whether to impose tariffs.

Trump is expected to initially keep the department's recommendation secret as he focuses on China and other pressing trade issues. He may not disclose details until he decides on whether to impose tariffs, a decision automakers believe could take weeks or months.

Last May, Trump said he was considering tariffs of up to 25 percent on imported vehicles. In June, Trump said the Commerce investigation about whether vehicle imports pose a national security risk would be done by the end of July. In November, Trump again threatened to impose tariffs after General Motors announced thousands of job cuts.

But the idea has faced strong opposition from Congress, automakers and foreign governments — including some, like Germany, who are the United States' closest allies and rankle at being designated a "national security risk. So Trump has moved slowly on the issue.

Major automakers said last year that tariffs of 25 percent on imported cars and parts would raise the price of U.S. vehicles by $83 billion annually and cost hundreds of thousands of jobs.

They argued there is no evidence auto imports pose a national security risk. Canada and Mexico each won duty-free access to 2.6 million vehicles as part of a new North American free trade deal even if the administration moves ahead with the tariffs.

Administration officials have said tariff threats were a way to win concessions from Japan and the European Union at the bargaining table. Last year, Trump agreed not to impose tariffs as long as talks were proceeding in a productive manner.

Several Republican senators oppose tariffs. Some back legislation to restrict presidential authority to impose tariffs on national security grounds.

Senator Charles Grassley, a Republican who chairs the Finance Committee, said Thursday new auto tariffs would damage the U.S. economy. "Raising tariffs on cars and parts would be a huge tax on consumers who buy or service their cars, whether they are imported or domestically produced," he said.

Trump has urged the EU to drop its 10 percent tariff on imported vehicles. The U.S. passenger car tariff is 2.5 percent, while it imposes 25 percent tariffs on pickup trucks.

The Alliance of Automobile Manufacturers, whose members include General Motors, Volkswagen AG, Toyota Motor Corp, has warned tariffs would boost imported car prices nearly $6,000 on average.

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