Published: Fri, July 06, 2018
Markets | By Noel Gibbs

European Union warns Trump that auto tariffs could lead to $300B retaliation

European Union warns Trump that auto tariffs could lead to $300B retaliation

Dealers said the clear win might settle one source of political uncertainty, but Obrador was also expected to sharpen Mexican divisions with Trump.

The European Commission, the EU executive that handles trade for the bloc, said on Monday it was trying to convince its U.S. counterparts that imposing such tariffs would be a mistake. In May, his administration had initiated an inquiry to ascertain if the automobile imports were a national security threat.

"The European Union is possibly as bad as China, only smaller", Trump said on Fox News' "Sunday Morning Futures" program.

"They send a Mercedes in, we can t send our cars in".

"Look what they do to our farmers", Trump urged.

The Trump administration has been recently slapping tariffs on other countries, claiming that the United States was "being treated unfair on trade", raising grave concerns of a global trade war.

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Brussels delivered the threat amid growing fears of an escalating trade war, as the U.S. president targets the bloc and others, including China, as part of a campaign to protect USA jobs.

President Donald Trump has boldly declared that trade wars are easy to win. Last week's European Union bailout package for Germany may not have worked in spite of Greece agreeing to help.

Economists at Bank of America Merrill Lynch have warned that a full-fledged trade war, especially one that lasts more than a year, would slow the USA economy.

Experts say an increase in USA tariffs could pose a serious challenge to European auto-makers.

Taking countermeasures against recent tariffs put on imported aluminum and steel as a guideline, the report assesses potential indirect costs at up to $294 billion.

The initiative is also enlisting 2,000 local and state chambers of commerce to call on Congress to review the "real costs" of the tariffs, Murphy said.

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EU Trade Commissioner Cecilia Malmstrom said that while the EU does have higher tariffs on cars than the US - around 10 percent versus 2 percent - the tariffs only apply to a fraction of the vehicle market, around 15 percent.

"Increased import tariffs could lead to a smaller GM, a reduced presence at home and overseas for this iconic American company, and risk less - not more - U.S.jobs", the company said.

Meanwhile, Canada retaliated against United States steel and aluminum tariffs by imposing retaliatory duties on $12.6 billion in American goods starting Sunday. These penalties would take effect, Trump has said, if Beijing fails to reform its trade practices and proceeds with retaliatory tariffs.

European Union officials suggested Trump had only himself to blame for the falling-out with a company he had previously hailed as "a true American icon".

Trump said last week that the government was completing its study and suggested the United States would take action soon, having earlier threatened to impose a 20 percent tariff on all EU-assembled cars. The Trump administration suspended its tariffs after Beijing agreed to increase its purchases of US goods, especially in agriculture and energy.

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