Foreign Affairs

European Union Threatens US With Tariffs On Exports Worth Nearly $300 Billion

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The European Union may retaliate with tariffs on U.S. exports worth as much as $300 billion if the Trump administration takes aim at European automakers, the European Commission in Brussels warned.

The commission sent a written warning to the Department of Commerce on Friday explaining that the investigation into imports of foreign-made auto parts and vehicles and any resulting trade penalties threaten to plunge the world into a trade war, The Financial Times first reported Monday. The document submitted last week suggested that $294 billion, roughly 19 percent of all U.S. exports, could be affected should the Trump administration force the European Union’s hand on this issue.

The nearly $300 billion figure is roughly equivalent to the value of U.S. auto imports, which was $330 billion in 2017. Concerned about the state of international trade, the president has threatened to place a 20 percent tariff on all European auto exports.

In May, the U.S. government launched a Section 232 investigation into whether or not auto imports constitute a real threat to U.S. national security. “There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Secretary of Commerce Wilbur Ross said in a statement at the time.

The European Union and others, already rattled by the administration’s steel and aluminum tariffs, are concerned that the president may soon take action based on the results of that investigation.

“As markets would become fragmented, US costs would rise, US automobile exports would suffer, US consumers would pay higher prices, and jobs would be lost,” the document presented to Washington on Friday warned. “This development harms trade, growth and jobs in the US and abroad, weakens the bonds with friends and allies, and shifts the attention away from the shared strategic challenges that genuinely threaten the market-based western economic model.”

President Donald Trump has repeatedly made his frustration with “the car situation” known, most recently in an interview with Maria Bartiromo.

“The European Union is possibly as bad as China just smaller. It’s terrible what they did to us.  European Union — take a look at the car situation.  They send a Mercedes in; we can’t send our cars in,” the president explained, adding, “The European Union last year made if you look at a trade surplus – which I think is a very important thing, $151 billion.”

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