Top European Union officials have warned they are ready to put tariffs on 20 billion dollars (£15 billion) of American goods if Donald Trump puts duties on car imports, ahead of talks with the US president.
EU Commission president Jean-Claude Juncker and trade chief Cecilia Malmstrom will meet Mr Trump in Washington to try to talk him out of imposing the car tariffs, which would hurt the industry on both sides of the Atlantic and increase trade tensions.
Ms Malmstrom told Swedish newspaper Dagens Nyheter: “The aim of this visit is to cool down the situation and prevent an escalation of the trade conflict.”
However, she noted that if the US proceeds with the duties, the EU is ready to respond. It will impose new tariffs on a range of US products, including agricultural and high-tech products and machinery.
Mr Trump has repeatedly called the EU – which includes many of the America’s oldest and most committed allies – an unfair trading partner and even labelled it a “foe”.
His administration this year imposed tariffs on steel and aluminium, drawing retaliation from the EU on a series of US goods.
It is unclear what Mr Trump’s approach will be in the talks. After tweeting that “Tariffs are the greatest!” he suggested hours later in another post that “both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies!”
The EU’s budget chief, Guenther Oettinger, said the EU was prepared to discuss lowering and restructuring all tariffs for all products.
He told German broadcaster Deutschlandfunk: “We want to avoid a further escalation of the trade dispute (into) a trade war.
“We have good arguments, clear numbers and we have ideas, too.
“Whether these will help, nobody knows. But not to try, not to fly over there for the meeting, would have been the wrong path.”
And it is not just Europeans opposing these tariffs, but American companies as well.
The duties would increase the cost of many components that American manufacturers import and use in making cars. Ultimately, that will make cars more expensive for US consumers.
The EU has a huge stake in the US industry, where European companies produce almost three million cars a year, accounting for over a quarter of production in the United States.
The biggest exporter of American-made cars is a German company – BMW, through its plant in Spartanburg, South Carolina.
German producers and supplies employ more than 118,000 people at about 300 factories and manufacture more than 800,000 vehicles per year in the US – with more than half of the cars being exported, according to figures provided by the German automotive industry.
Meanwhile, Mr Trump has accused China of “vicious” tactics, tweeting that China was specifically targeting US farmers with retaliatory tariffs because “they know I love & respect” them.
His comments came after his administration announced a plan to provide 12 billion dollars (£9 billion) in emergency relief for farmers who have been hit hard by the president’s trade disputes with China and other countries.
Addressing the China trade relationship, Mr Trump wrote on Twitter: “They are being vicious in what will be their failed attempt. We were being nice – until now!”