The European Union has warned that Donald Trump's threat to impose punitive tariffs on European car imports would amount to a 'tax on the American people' and would weaken the US economy. In a hard-hitting paper, the European Commission estimated that almost $300bn (£228bn) worth of US goods could be hit by countermeasures.
The warning comes in the commission's first detailed response to the US Department of Commerce following Trump's threat to hit imports of European cars with tariffs. The US president told Fox News on Sunday that 'the European Union is possibly as bad as China, only smaller', claiming that 'they send a Mercedes in, we can't send our cars in'.
The EU imposes a 10% tariff on US-built cars, while the US levies a 2.5% tariff on cars assembled in Europe and a 25% tariff on European-built vans and pick-up trucks. Trump promised to unleash tariffs on European car imports after the EU retaliated against his tariffs on steel and aluminium, sparking fears of a trade war that pushed global stock markets into the red on Monday.
The EU paper argues that the White House is again risking the US's international reputation, cautioning against 'yet another disregard of international law' that 'the international community cannot and will not accept'. EU leaders were rattled by Trump's disregard for the post-1945 world order at the G7 summit in Canada.
European Commission President Jean-Claude Juncker is due to meet Trump in Washington before the end of July, following an invitation from the White House. According to the commission analysis, European carmakers in the US produce 2.9m cars, about 26% of US production, supporting 120,000 US manufacturing jobs and 420,000 dealership jobs.
European carmakers are worried that escalating measures will play havoc with global supply chains. Jonathan O'Riordan, international trade director at the European Automobile Manufacturers Association, said: 'I am hoping that when it becomes very obvious that even US industry doesn't want this, that that would give pause for thought. However, we are concerned.'
