Trump promises to cut tariffs on EU-made cars

President Donald Trump has promised to lower tariffs on EU-manufactured cars and auto parts to 15pc as part of a trade agreement with the European bloc, but the effective date remains undetermined.

An executive order by Trump, unveiled late on 5 September, found the reduction in the tariff from 25pc "is necessary and appropriate to implement," but set no implementation date. EU trade commissioner Maros Sefcovic still hailed the executive order as "paving the way for car and parts tariffs to drop to 15pc".

The European Commission already has met its part of the bargain by releasing proposals on 28 August to grant zero tariffs for fertilizers, plastics, machinery, cars and car parts and other US products. The US-EU agreement required the US to lower the car tariff rate after the European Commission released its zero-tariff list.

Trump last week complained via his social media platform about stiff fines the European Commission imposed on US tech giant Google over the alleged breach of EU anti-trust regulations.

More tariff relief for US consumers

Trump's executive order, released without fanfare, also lays out the case for Trump to unilaterally reduce the tariffs he imposed on some foreign imports to zero, even in the absence of trade agreements with foreign countries.

The Trump administration can cut tariffs to zero for products that "cannot be grown, mined, or naturally produced in the US" or are not produced in sufficient quantities to meet US demand.

The executive order expanded the list of commodities exempted from tariffs, in some cases because of the confusion new tariffs caused in the markets.

The newly expanded zero tariff list, which becomes effective at 12:01am Monday, includes several nickel products, critical minerals and even pharmaceutical products — the latter are subject to ongoing "Section 232" investigations that are likely to impose stiff tariffs on that category of products.

The tariff exclusions will also apply to US consumer staples such as coffee and bananas. The Trump administration earlier this summer struggled to explain why it imposed taxes on those imports, prompting a lawmaker to tell commerce secretary Howard Lutnick at a congressional hearing, "We do not build bananas in the US".

The lifting of tariffs on all imported coffee and cocoa partially alleviates the US-Brazil trade conflict. Brazil accounts for more than 30pc of US coffee imports.

Two steps forward, one step back

The unilateral rollback of tariffs on key commodities follows the Trump administration's pattern of rejecting the possibility of an inflationary fallout from tariffs and, at the same time, excluding key consumer items from tariffs.

Energy commodities from Canada and Mexico were briefly subject to tariffs in the first wave of Trump's trade actions, but his administration has exempted all energy commodities from its subsequent tariffs.

The administration also exempted smartphones and other retail consumer electronics from tariffs.

The collective burden of tariffs amounts to $330bn/yr over the next decade, the nonpartisan Congressional Budget Office projected before the latest announcement of exclusions.

The Trump administration estimates a potential revenue increase from tariffs even higher, at $750bn-$1 trillion/yr.

The administration could potentially be forced to refund to US importers about half of the estimated tariff revenue if it loses the lawsuit moving through US courts on the legality of Trump's tariffs.

"We would have to give a refund on about half the tariffs, which would be terrible for the treasury," US treasury secretary Scott Bessent said in a televised interview on NBC's Meet the Press on Sunday.

The Trump administration has asked the US Supreme Court to schedule a hearing in early November to hear the appeal of a court ruling that determined his administration overstepped its authority by placing emergency tariffs on most goods imported into the US.

The plaintiffs in the case, a group of US companies, told the Supreme Court on 5 September they agree with the government's request for an expedited hearing on the appeal.

It will be up to the Supreme Court, where Republican-appointed justices hold a 6-3 majority, to decide whether to consider the Trump administration's request to overturn the tariff decision and, if it accepts the appeal, whether to expedite the process.

By Haik Gugarats