EU warns U.S. of boomerang effect if Trump imposes car levies

EU warns U.S. of boomerang effect if Trump imposes car levies

The European Union is slamming the Trump administration for considering tariffs on auto imports, saying they could lead to global retaliation against some $300 billion in usa goods.

The European Union has warned the United States that imposing import tariffs on cars and auto parts would harm its own automotive industry and likely lead to counter-measures by its trading partners on US$294 billion of U.S. exports.

This comes after President Trump pointed out that the European Union is charging an unfairly high tax on American-made cars.

"We don't know if this offer to open up is genuine yet", a third European Union diplomat said.

Those measures have drawn retaliatory tariffs on billions of dollars of United States exports from major trading partners including China, the European Union, Canada and Mexico.

Tom Donohue, president of the U.S. Chamber of Commerce, is launching a new campaign to oppose Trump's trade tariff policies.

Stocks on Wall Street were volatile as investors anxious about the mounting trade war between the USA and its trading partners.

Mr. Trump's administration wants Germany - which would be hardest hit by automotive tariffs - to pressure the European Union to come to an agreement.

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The EU has a 10 per cent tariff on cars compared to 2.5 per cent for cars entering the US.

The report also said Trump's tarriffs threaten $46 million in exports to China, and $30 million to Mexico.

Trump railed against his trading partners during the meeting, according to sources, and withdrew his support for a joint communique after leaving the summit, angering and bewildering some of Washington's closest allies.

It also argued that tariffs on cars and vehicle parts could hurt economic growth in North America, with an estimated initial $US13-14 billion hit on United States gross domestic product. Trump slammed the company's move, saying it was tantamount to surrender, and threatened punitive taxes.

In a submission to the U.S. authorities, the European Commission warned: "Economic analysis confirms that an increased tariff on these products (cars and auto parts) will be harmful first and foremost for the United States economy".

Canada's retaliatory tariffs against American imports, including Florida orange juice, ketchup and bourbon, were due to take effect on July 1.

Global equities fell on Monday as investors anxious about an escalation of the trade disputes.

The Commission said global retaliation against USA tariffs on auto imports would have a much bigger impact on the American economy than the backlash provoked by the Trump administration's steel and aluminum tariffs this year.

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