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Washington risks nearly $300bn trade tariff reprisals, EU warns

The logo of German carmaker Audi is pictured on new Audi cars on the sidelines of the Audi AG annual general meeting in Ingolstadt, southern Germany, on May 9, 2018. (Photo by AFP)

The European Union has warned Washington that imposing import tariffs on cars from the 28-member bloc could lead to “countermeasures” against nearly $300 billion worth of US exports.

In a 10-page submission to the US Commerce Department on Monday, the European Commission, which handles trade policy for the bloc's members, blasted the tariffs on vehicle imports from Europe and warned that such measures would harm America’s own automotive industry.

"Economic analysis confirms that an increased tariff on these products will be harmful first and foremost for the US economy," the letter said.

The commission said that "up to $294 billion of US exports ... could be subject to countermeasures across sectors of the US economy," which was equivalent to a staggering 19 percent of total US exports in 2017.

The document also stressed that European car companies were important contributors to the US economy and "well-established" there.

"In 2017, US-based EU companies produced close to 2.9 million automobiles, which accounted for 26% of total US production," it said, adding that they supported 120,000 direct and indirect US jobs in plants across the country.

“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 added, arguing that cars would become more expensive and harder to sell.

Meanwhile, global automakers warned this week that imposing the tariffs on car imports would raise prices of imported vehicles by up to $6,000 per car and lift prices of locally made cars.

The US administration is currently mulling tariffs of up to 20 percent on all cars and car parts manufactured within the EU. It has already levied hefty tariffs on steel and aluminum imports from Europe.

Trade disagreements between Washington and Brussels have intensified since March 8 when the US imposed a 25 percent tariff on imported steel and a 10 percent tariff on aluminum imports from the EU, Canada, Mexico and China.

US President Donald Trump argued at the time that enormous flows of imports to the US were putting in jeopardy the American national security, and made an odd departure from a decades-long US-led move towards open and free trade.

The bloc recently hit back with retaliatory tariffs on iconic US goods worth 3.2 billion dollars, including jeans and motorcycles.

Some EU countries like France and the Netherlands have sought a tough line against Washington while others like Germany have urged a different approach and one that could resist Trump’s "America First" policies.


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