Trumptonium1 wrote:Costa Fierro wrote:
All the Europeans have to do is just put a higher tariff on British-made cars being sold in the continent and that would spell disaster for much of the British automotive industry. I don't think the UK would end up putting tariffs on vehicle imports from the continent because it'd be one of the worst decisions it could make.
They cannot impose higher tariffs on a single country. WTO rules explicitly prevent such actions. The UK will have the same tariffs exporting cars into the EU as the United States, Canada, Taiwan and Botswana.
The UK can hence easily apply higher tariffs (worldwide) on SUV imports, and hence giving the UK leverage over any negotiation with Nissan, because Nissan sells far more Qashqai's (3rd highest selling car model in UK), X-Trails and Pathfinders in the UK than any marginal savings it would make from avoiding """uncertainty""" and token tariffs by moving production to France and Romania.
A 30% tariff on cross-SUVs would put Nissan sales in the UK into freefall, a market they generate 5 billion pounds a year from (worldwide: 80bn). 5 billion is more than more than all UK (nissan included) manufacturers are expected to pay in tariffs to the EU with their 4% tariff on vehicle imports.
So the threat is easy. You move production to Europe, we tariff your main product and strip you of your European market cash cow. They can then move out of spite or stay out of logic. Or fear. Both work.
The EU can impose higher tariffs on Britain, since the EU has trade agreements with a large number of other nations, including Canada and the US. The EU doesn't recognise Taiwan as an independent nation, so that's a bummer, and it has a trade agreement with Botswana as well, allowing them to set their own tariffs in spite of WTO rules. Britain would be one of the few countries with which the EU would not have their own trade agreement, so they would trade among GATT lines.
Besides, the GATT allows for retaliation in case of needlessly punitive protectionist tariffs, so if the UK ever did that, GATT rules would allow the EU to retaliate.
Even your example falls flat. Sure, the UK buys a lot of Qashqais, but not as much as the rest of the EU combined.
http://carsalesbase.com/european-car-sa ... n-qashqai/
https://www.carmagazine.co.uk/car-news/ ... nd-losers/
The UK is about a quarter of all current EU sales. So, yeah, Nissan might throw everything overboard to save that 25% of their European sales, or they could focus on the other 75%. What path would logic choose?
EDIT: Not to mention the GATT rule that a tariff has to apply to 'like products', and SUVs and other cars are 'like products' in the eyes of the WTO, so the UK would have to apply this 30% tariff to all cars from all other nations.
