FIM Brussels – EU-US trade relations: What impact for motorcycle industry?
On 8th March, President Trump signed an Executive Order setting out a plan to introduce tariffs on imports of steel and aluminium at a global level in an attempt to erect economic safeguards following his threat to do so a week earlier. The White House confirmed at the same time that the order would enter into force on 23rd of March and would set tariffs on steel at 25% and on aluminium at 10%. The US affirmed that the 15-day gap between the signing of the order and its entry into force would be used as a de facto negotiation period. Since the news, the US has also confirmed that both Canada and Mexico will be exempted from the tariffs pending ongoing North American Free Trade Agreement (NAFTA) negotiations.
At this stage, the situation regarding the EU is unclear. The European Commission has applied for an exemption as per that afforded to Canada and Mexico and is awaiting confirmation of the relevant criteria from the US Trade Representative. In case of failure, the EU can take retaliatory measures under the safeguard agreement which allows the EU in turn to impose tariffs on a list of targeted products and lodge a formal complaint to the WTO dispute settlement body.
The EU’s reaction thus far has been limited to rhetoric. However, there are clear indications that PTWs may soon be dragged into the scope of the emerging trade tensions. Significantly, European Commission President Jean-Claude Juncker sent a stern warning to the US on 2nd March by expressly stating on German television that the EU will elect to impose tariffs on Harley-Davidson motorcycles. President Juncker said “We will put tariffs on Harley-Davidson, on bourbon and on blue jeans – Levis”. Since then President Trump has also stated that should the EU not drop existing tariffs on US products then he would consider bringing in tariffs on EU cars.
Trade representatives for the US, EU and Japan met on 10th March in Brussels for talks. However, the EU noted afterwards that there is no clarity on whether the EU will be subject to the tariffs and on which goods tariffs are likely to be placed following the discussions between Commissioner Malmström, Robert Lighthizer, US Trade representative and Japan’s Trade Minister Hirpshige Seko. Most recently, on 16th March the EU published an extensive retaliatory list which includes motorcycles and mopeds with internal combustion engines as well as vehicle parts, alongside iron, steel, industrial and agricultural goods and products totalling $3.5 billion at a tariff rate of 25%.
In response, European industry has been quick to present its position following a leak of the EU list. ACEM, the European Association of Motorcycle Manufacturers, issued a press release calling for the motorcycle industry to be excluded from the trade dispute, noting that they had written directly to Commissioner Malmström on the matter. ACEM note that their primary concerns rest on the interlinked nature of the American and European PTW industries and the high likelihood of the USA responding punitive action on the European PTW sector should the EU follow through on President Juncker’s threat.
On the EU side, the initial formal discussions by Member State heads of government on a response will take place at the European Council on 22nd and 23rd March. The meetings are set to include discussion of the draft list of US products under consideration for retaliatory tariffs prepared by the European Commission on the same day that the US tariffs are supposed to come into force.