By Christoph Steitz and Emma Rumney
FRANKFURT/LONDON (Reuters) -European firms called on trade negotiators to redouble efforts to strike a deal with Washington after U.S. President Donald Trump threatened a 30% tariff on EU imports from August, with no mention of hoped-for special treatment for cars or spirits.
Trump on Saturday said he planned to impose the higher tariff rate on imports from Mexico and the European Union from August 1, mounting pressure on Brussels to scramble for a deal to avert a potential massive blow to the bloc’s economy.
The move sparked a slide in European autos and alcohol stocks on Monday, while regional food makers said the 30% rate, if imposed, would be “disastrous.”
“The escalating tariff conflict with the USA poses a serious threat to many German companies,” said Volker Treier, head of trade at Germany’s DIHK chamber of commerce, urging ministers to quickly seal a deal.
“Tough negotiations are now needed to avert a collapse of transatlantic trade. Only a united Europe can effectively defend its economic interests.”
Carmakers’ shares slipped, with Volkswagen, Fiat-to-Jeep owner Stellantis, Renault, BMW, Mercedes-Benz and Porsche all down around 1-2%.
The threatened 30% tariff is “separate from all sectoral tariffs,” Trump wrote in a letter to European Commission President Ursula von der Leyen, implying a 27.5% duty on autos, in effect since April, would still stand.
UNCERTAINTY
The announcement of the additional possible tariff adds more uncertainty into one of the world’s biggest trade partnerships, with some $975.9 billion of two-way goods trade last year, USTR data show.
Mercedes-Benz said in a statement that an agreement was “crucial for the future economic success of both markets” in Europe and the United States, and for parties involved to work “intensively and as quickly as possible on a trade agreement.”
Shares in other major European firms exposed to the United States were also largely down.
Pernod Ricard, maker of Jameson whiskey, was down 1.5%, while cognac maker Remy Cointreau sank 4%. Rival Diageo, where sales of Canadian whisky and Mexican tequila drive its U.S. business, bucked the trend, up over 0.5%.
French luxury powerhouse LVMH dropped 1.5%, while consumer goods firm Nestle, Procter & Gamble and Reckitt Benckiser were down less than 1%.
“The biggest problem with the current tariff policy is the lack of a stable, predictable tariff framework,” said Pal Skirta, analyst at Metzler Equities, adding it made business planning and operations “significantly more complex” and costly.
(Reporting by Christoph Steitz, Amir Orusov, Ilona Wissenbach and Emma Rumney; Writing by Adam Jourdan; Editing by Miranda Murray, Kirsten Donovan, Louise Heavens and Bernadette Baum)
