EU warns Trump: motor tariffs could lead to £230bn retaliation

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The European Union has condemned the Trump administration for considering tariffs on motor imports, saying they could lead to global retaliation against 300 billion dollars (£230 billion) in US goods.

European Commission spokesman Margaritis Schinas said the US investigation into the possibility of motor tariffs “lacks legitimacy, factual basis and violates international trade rules”, like last month’s US tariffs on steel and aluminium imports.

The EU sent comments to the US on whether motor imports pose enough of a threat to US national security to justify tariffs and estimating the economic impact.

President Donald Trump cited national security concerns for the previous tariffs. The EU, Mexico, Canada, Turkey and India introduced duties on US products in return.

Mr Schinas said European car makers create over half a million jobs in the US.

Donald Tusk
Donald Tusk warned that Mr Trump’s policies are harming transatlantic relations (Virginia Mayo/AP)

This would be aggravated by the likely counter-measures the 28-nation bloc and other trading partners might take.

The EU responded to the steel and aluminium tariffs with “rebalancing measures” that hit around 2.8 billion euros (£2.5 billion) of American-made products.

The EU said the US motor industry is in good health, but any restrictive duties could undermine that.

The impact of retaliatory measures by Washington’s trading partners could total around 19% of total US exports in 2017, the EU estimates.

Last week, European Council president Donald Tusk warned that Mr Trump’s policies are harming transatlantic relations and “we must be ready to prepare our Union for worst-case scenarios”.

Mr Tusk thinks the US president’s action on tariffs, pulling out of the global climate agreement and withdrawing from the Iran nuclear deal — an agreement Europeans say is vital to their security — is part of a pattern rather than isolated incidents. Any tariffs on EU cars would hit Germany hard.

EU trade commissioner Cecilia Malmstrom said that while the EU does have higher tariffs on cars than the US — around 10% versus 2% — the tariffs only apply to a fraction of the market, around 15%. The US has higher tariffs on trucks and other products, she said.

She said the EU cannot lift its car tariffs for the US or it would have to do so for the rest of the world, and “there’s no way” EU member countries would agree to that.

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