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July 6, 2018 www.intellinews.com I Page 8
Coming US-EU trade war threatens CEE auto industry
Trump has repeatedly criticised the EU, which had a $101bn trade surplus with the US in 2017, of unfair competition, claiming his country is being “ripped off” by European economies.
Having imposed punitive duties on some Chinese products — after which Beijing’s additional du- ties on $34bn worth of US imports are due to kick in on July 5 — Trump has been talking in the last few months about similar measures towards EU exporters, in particular for cars.
“The EU is possibly as bad as China, just smaller. It’s terrible what they do to us,” Trump told Fox News last month, going on to again air his often voiced grievance about the failure of European Nato members to meet the 2% of GDP defence spending target for alliance members.
In a webinar on June 28, wiiw analysts said the risk of a trade war was one of the main down- side risks facing Central, Eastern and Southeast Europe.
“The risk of a trade war, especially the intention of President Trump to impose higher import tariffs on European cars will affect many countries in the region, especially in CEE where the car industry
is extremely important,” wiiw economist Vasily Astrov said.
wiiw calculated the potential impact of a 25% tar- iff on EU car imports in May in its report ‘US tar- iffs on cars: An expensive and dangerous gamble’, though the figure currently being bandied about is a somewhat lower 20%.
Overall, cars account for 13% of EU exports to the US, but in Slovakia — which has the highest per capita car production of any country in the world
— cars account for a whopping 60% of total ex- ports to the US, though admittedly its car exports to the US are relatively small and account for only 1.3% of its total exports.
The car industry is responsible for more than half of Slovakia's exports, and swelled by 10.7% in April, according to the latest statistics office data, which was more than double the 4.2% growth of the wider industrial sector. Lubomir Korsnak, chief economist of UniCredit Bank Czech Republic and Slovakia, stressed at the time that the car in- dustry “should be the main driver of the industry”, and pointed out that it would get a further boost with the launch of Jaguar Land-Rover’s new plant.
Also Slovakia, Germany, where cars account for 28.4% of exports to the US, would bear a sub- stantial direct impact of a tariff hike; Germany’s exports of cars to the US are the largest in the bloc and account for 2.7% of its total exports. Ger- many is followed by Hungary, where cars make up 27.7% of its exports to the US. Automakers active in Hungary include Mercedes, which reached a record of 190,000 vehicles produced at its Kec- skemet factory last year.
Other CEE/SEE countries would experience a smaller impact. Cars account for just 4.8% of the Czech Republic’s exports to the US, while the fig- ure is 4.0% in Romania, 3.0% in Poland and 2.9% in Slovenia.
In addition to the direct consequences of dramati- cally higher export tariffs, there is also the indi- rect impact on components manufacturing.
“I am not only taking about direct sales of cars to the US,” said Astrov during the webinar. “There
is also the indirect impact as many countries are integrated in international supply chains, they supply components for cars produced in Germany, for example, that are then exported to the US.”
“Automotive production is one of the industries with the largest cross-border production inte- gration and therefore not only the car exporters