Car Tariffs? Europe Is Ready to Retaliate as Trade Dispute Grows
(Bloomberg) -- The European Union says it will continue a tit-for-tat escalation in its trade dispute with the U.S. while countering President Donald Trump’s assertion that the U.S. is being treated unfairly by the 28-nation bloc.
Jyrki Katainen, the EU commissioner in charge of jobs and growth, told the French newspaper Le Monde in a story posted Saturday that if Trump applies new tariffs to European cars, as he threatened this week, the bloc “again, would have no choice but to react.”
The EU imposed tariffs on 2.8 billion euros ($3.3 billion) of American products this week in response to duties on its metals exports deemed to be a threat to U.S. national security. The commission, the bloc’s executive arm, said that the 1 trillion euros in commerce between the EU and U.S. is equitable, and it disputed Trump’s assertion that the EU needs to be punished because of unfair trade practices, according to an internal EU memo obtained by Bloomberg.
The U.S. had a surplus in services trade with the EU of $45 billion in 2017, according to the memo, citing U.S. statistics. The memo also said the EU is the largest investor in the U.S., accounting for 72 percent of inward foreign direct investment and that EU-headquartered firms employed 3.2 million people in the states.
Including trade in goods, services and primary income from investments, the U.S. runs a 12 billion euro surplus with the EU, according to the memo.
“Based on the Tariffs and Trade Barriers long placed on the U.S. and its 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 U.S. Build them here!” Trump said in the tweet.
The European tariffs target politically resonant products, including 25 percent duties on Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon. The countermeasures, which went into effect on Friday, hit U.S. consumer, agricultural and steel products in many key Republican constituencies, putting pressure on Trump ahead of crucial midterm elections in November.
“Members of U.S. Congress, from both parties, don’t necessarily share the views of the president, nor does the private sector,” Katainen told Le Monde. “Once the measures start making an impact, the pressure will mount.”
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