The U.S. Automotive Industry breathed a collective sigh of relief late Wednesday after news that Donald Trump had decided to ease moving forward in a major trade war with the European Union.
In a joint press conference at the White House Rose Garden, Trump and European Commission president Jean-Claude Juncker made the announcement to work towards tariff-free trade. “We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods,” Trump said.
As part of the deal, the two parties said they would work toward zero tariffs, barriers and subsidies. They also said they would rectify the steel and aluminum tariffs imposed by the US which started the dispute.“So we had a big day, very big,” Trump said.
However, many industry observers were still leery after the news, primarily due to the vague nature of the deal.
Jeremy Acevedo, manager of industry analysis with Edmunds.com, dubbed the announcement as, “welcome news,” but cautioned against overconfidence. “While this is a great step in the right direction, the tacit and indistinct nature of the agreement and the instability of similar trade talks ensures that the auto industry will be watching this matter closely,” he said. When asked if the announcement was a harbinger of good news for tariffs being repealed in Asia, Acevedo noted the dissimilarities on the relationships. “We are still waiting for the other shoe to drop on this one,” he said. “It’s encouraging that President Trump was able to make inroads with the European Union on the trade front, but the Asian countries have separate trade relationships with individual challenges and the outcome of those trade deals still looms large over the auto industry.”
The tariff issue – not only with the EU, but also with China and Mexico – has been a significant cause of concern this year. In the last week alone, developments related to the tariffs have taken center stage with the automotive industry.
Last week, representatives from every other automotive association in America penned a letter to Trump. The letter ran as a full-page advertisement in the Wall Street Journal and urged the president to not raise import tariffs on autos and auto parts.
Earlier this week, GM reeled back in their optimistic economic outlook and slashed its economic profit forecast. The company had projected $6.50 a share by the end of the year, but they shifted the number to $6. On Wednesday, Ford reported its second-quarter net profit fell by almost half, missing expectations due to a fire at a parts supplier and tariffs.