EU Warns US Imposing Car Import Taxes Could Backfire

The European Union is serious about stopping Trump from imposing import tariffs.

File: Global Carmakers Brace For Tariff Whiplash
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The European Union warned that steps would be taken to prevent the United States from imposing import tariffs on car parts and cars, according to Reuters

“We’ll spare no effort, be it at the technical or political level, to prevent this from happening,” said a spokesman for the European Commission, the EU agency that handles trade. 

Last Friday, the EU said that tariffs on cars and car parts were unjustifiable and did not make economic sense, according to a 10-page report sent to the United States Commerce Department. 

This comes after President Trump instructed the Commerce Department to launch an investigation into the EU and the auto industry on the grounds of national security matters. Trump has criticized the European Union for having higher import taxes on cars and for its trade surplus with the United States, this includes a 10 percent tax on cars entering the EU compared with a 2.5 percent tax for cars entering the U.S. 

Last year the European Union exported $43.6 billion worth of cars to the United States.

The documents submitted to the Commerce Department also said that tariffs on cars and car parts could undermine auto production in the United States by creating higher costs for U.S. manufacturers. It calculated that a 25 percent tariff would have a negative impact of $13 to $14 billion on the U.S. gross domestic product initially.

According to Reuters, the submission also said that EU companies make approximately 2.9 million cars in the United States and support 120,000 jobs, adding in car dealerships and car parts retailers that number shoots up to 420,000 jobs.