Higher auto tariffs could follow moves on steel, aluminium

US President Donald Trump seems poised to escalate his trade wars, and looks to be opening up a new front in the automotive sector against dominant Germany luxury brands.

The US President has told Emmanuel Macron, French President, he will keep going with his trade policies until there are no more Mercedes-Benz vehicles rolling down New York's Fifth Avenue, diplomats in Europe and the US have told Wirtschafts Woche.

Last week, the Trump administration began investigating whether car imports are endangering US security.

In January 2017, after his election but prior to inauguration, Trump told German newspaper Bild: “When you walk down Fifth Avenue, everybody has a Mercedes-Benz parked in front of his house.

“You were very unfair to the USA. It isn’t mutual. How many Chevrolets do you see in Germany? Not many, maybe none, you don’t see anything at all over there. It’s a one-way street."

As the business publication points out, this ignores the fact General Motors withdrew the Chevrolet brand from Europe in favour of Opel and Vauxhall, and many German-branded vehicles are built in the US and sold to customers in the EU.

Indeed, most of BMW's crossover range, including the popular X3 and X5, are built in the US for local and global sale.

Both BMW and Mercedes-Benz have factories in the US, although high-end and specialty models, such as the Mercedes-Benz S-Class that irks the President, are imported.

Overnight the US President caught Republicans in Congress off guard by imposing a 10 per cent tariff on aluminium, and a 25 per cent tariff on steel from the EU, Mexico and Canada.

He had earlier imposed similar sanctions on China, but had temporarily excluded the US' allies, including Australia.