Potential US/EU Trade War
by Stephen Lendman (stephenlendman.org – Home – Stephen Lendman)
Brussels retaliated against Trump imposed 25% tariffs on steel imports, along with 10% tariffs on aluminum imports.
In late June, Trump potentially upped the stakes tweeting: “Based on the Tariffs and Trade Barriers long placed on the US and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the US. Build them here!”
Brussels responded saying additional US tariffs “would be met with equivalent penalties imposed by affected trading partners.”
If Trump imposes tariffs on EU cars, Brussels warned it’s prepared to respond with up to $300 billion in duties on US products – a major escalation if things go this far.
Trump claims authorization under the 1962 Trade Expansion Act, baselessly saying it’s to protect national security, a catchall pretext for hostile US policymaking when legitimate reasons don’t exist.
If things devolve into trade war, millions of jobs could be lost in America and abroad, global economies taking a big hit.
Brussels explained that EU car production in America imports parts for their production facilities, along with “export(ing) a significant part of their production, thus contributing substantially to improving the US trade balance,” adding:
“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.” Higher priced cars will be harder to sell.
The Financial Times reported Brussels saying “an American investigation into whether foreign cars and parts posed a national security risk could plunge the global economy into a full-on trade war, harming employment in the US’s auto sector, which accounts for more than 4 million jobs.”
On May 23, the Trump regime’s Commerce Department launched an investigation into EU imports of autos and related products he called for expediting.
The EU exported cars worth $43.6 billion to America last year, importing from the US about one-seventh this amount – while producing 2.9 millions cars in America, supporting 120,000 jobs, 420,000 with car dealerships and parts retailers included.
According to Brussels, a 25% tariff on EU car imports to America would have a negative $13 – 14 billion impact on US GDP, without improving its trade balance, adding:
If similar counter-measures are taken, around 19% of US exports to EU countries could be affected.
European Commission Margaritis Schinas said Washington’s investigation into whether imported foreign cars and parts posed a national security risk “lacks legitimacy, factual basis and violates international trade rules.”
Last week European Council president Donald Tusk warned that “we must be ready to prepare our Union for worst-case scenarios.”
Brussels will participate in a July 19 and 20 Commerce Department public hearing on its so-called national security investigation of imports of autos, SUVs, vans, light trucks, and automotive parts – initiated under Section 232 of the 1962 Trade Expansion Act.
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