EU warns Washington of ‘harmful’ impact on US of car tariffs

EU warns Washington of ‘harmful’ impact on US of car tariffs  The European Commission has warned the United States that imposing tariffs on European cars “will be harmful first and foremost for the US economy.” The Commission’s warning was part of a response to a US request for comment on the issue. The response was dated last Friday and sent to the US Commerce Department’s Bureau of Industry and Security. The 11-page document states that the EU’s internal analysis “shows that 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.

” US President Donald Trump recently threatened to hit imports of European cars with a 20 percent tariff if Brussels doesn’t remove tariffs and other trade barriers in an escalating row. European car makers produced 2.9 million vehicles, or 26 percent of American car production, in the US last year, according to the document. Even without Chrysler — which is, as the Commission notes, “one of the traditional US ‘big three’ manufacturers” but is now of “European ownership”   production by EU-owned companies in the US “still amounts to 16 percent of national production and 1.8 million vehicles.”

The document also reminds Washington that European companies that produce in the US often import needed parts for their American factories, and also export large portions of their final product: “EU companies based in the US export a significant part of their production, thus contributing substantially to improving the US trade balance, which is a priority of the administration,” the paper states. “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 document adds, arguing that cars would become more expensive and harder to sell.

Plus, the Commission says imposing tariffs on European cars could elicit “countermeasures” from the US’s other trading partners: “The impact will be aggravated significantly by the likely countermeasures of US trading partners over a significant volume of trade,” the Commission warns.