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EU warns Trump: imposing car tariffs on Europe ‘will harm YOUR economy’

The Commission – led by President Jean Claude-Juncker – set out its position in a statement sent to the US Commerce Department’s Bureau of Industry and Security on Friday after a request for information.

The document warns that EU analysts have concluded “an additional import tariff of 25 percent, applied to automobiles and automotive parts, would in first instance have a negative impact on US GDP in the order of 13-14 billion USD, and the current account balance of the US would be not affected positively”.

Mr Trump has threatened to slap 20 percent tariffs on imports of European cars if Brussels refuses to remove tariffs and other trade barriers.

In total, European carmakers produce 2.9 million vehicles, equivalent to 26 percent of American car production, in the US last year, the document states.

Even if Chrysler – which the report states is now of “European ownership” – EU-owned companies in the US are still responsible for 16 percent of national production and 1.8 million vehicles, it adds.

In addition, European companies which produce vehicles in the US frequently import vital parts to American production plants, as well as exporting large numbers of finished products.

The document pointed out that EU companies based in the US exported a significant part of their production, therefore contributing substantially to improving the US trade balance.

It added: “Around 60 percent of automobiles produced in the US by companies with exclusive EU ownership are exported to third countries, including the EU.

“Measures harming these companies would be self-defeating and would weaken the US economy.

“The impact will be aggravated significantly by the likely countermeasures of US trading partners over a significant volume of trade.

“Early studies, based on the experience of the steel and aluminium Section 232 investigations, estimate that up to 294 billion USD of US exports (equal to 19 percent of US total exports in 2017) could be subject to countermeasures across sectors of the US economy.

“These would further amplify the negative effect on GDP.”

The Commission’s statement echoes the words of General Motors, the largest car manufacturer, in a report also filed with the US Commerce Department on Friday.

It warned that broad tariffs could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less – not more – US jobs."

Such tariffs could push prices up and reduce sales, it suggested, adding that even if manufacturers did not pass on higher costs to their companies “this could still lead to less investment, fewer jobs, and lower wages for our employees.

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