Europe warns of ‘swift’ response to potential US car tariffs

US trade representative Robert Lighthizer with EU trade commissioner Cecilia Malmström, during a meeting at the European Commission last year. [European Commission]

The European Commission said on Monday (18 February) that the EU will respond in a “swift and adequate manner” to the possibility that the US may impose tariffs on European cars, following the submission of a US report on whether car imports represent a national security threat.

The US Department of Commerce submitted the conclusions to President Trump on Sunday, who will decide on what restrictive actions should be taken, if necessary.

In Europe, the report is regarded as leverage used by the US Administration in ongoing trade talks with the EU that seek to eliminate tariffs on industrial goods.

EU offers trade talks to Trump despite steel and olive tariffs

The EU and US will stick with trade talks even if Donald Trump decides to maintain tariffs on steel and aluminium after promising European Commission President Jean-Claude Juncker a reassessment.

But the European Commission said that the negotiations would continue only if the US does not impose levies, as was agreed on last July between Trump and Commission President Jean-Claude Juncker.

“The European Union will stick to its word as long as the U.S. does the same,” Commission spokesman Margaritis Schinas told reporters.

Schinas added that if the report “translates into actions detrimental to European exports, the European Commission would react in a swift and adequate manner.”

Currently, European auto imports face tariffs of 2.5% to access the US market, while the EU imposes a 10% duty to American exporters.

EU gets ready to retaliate if US adopts fresh car tariffs

The European Commission adopted on Friday (18 January) negotiating mandates to eliminate tariffs in all industrial goods, including cars, with the US, but also warned that the preparations to retaliate are “very well advanced” if Washington decides to slap fresh duties on European automobiles.

Trade commissioner Cecilia Malmström has said that the EU executive was already preparing counterbalancing measures in case the EU has to retaliate with fresh duties on car tariffs.

However, EU officials did not disclose further details of the plans.

The US president has threatened in the past to impose tariffs of 25% on vehicles manufactured overseas.

The National Automobile Dealers Association estimates that the tariffs would add as much as $2,270 to the cost of U.S.-built cars and $6,875 to the cost of imported cars and trucks, Bloomberg reported.

Trump has now 90 days to decide whether to apply the new tariffs.

German officials, however, are taking for granted that the report sent to the White House on Sunday concludes that car imports represent a threat to national security.

‘Unthinkable’

The chair of the European Parliament’s Trade Committee, German socialist Bernd Lange, said that it was “absolutely unthinkable” to consider that European cars could represent such a threat to US security.

“But as we have seen in the past in the case of steel and aluminium, rational arguments are not always the basis of decisions made in Washington,” he said.

“Europe must stand united and make it clear that possible further illegal tariffs would cause serious damage to transatlantic relations, and we must show the red card to ruthless nationalism,” Lange added.

The submission of the US report came as EU Trade ministers discuss in Bucharest (Romania) this week discuss the mandate to eliminate tariffs on industrial goods for EU-US trade relations.

Malmström visits Washington as potential tariffs on cars overshadow trade talks

EU Commissioner for trade Cecilia Malmström travels to Washington on Tuesday (8 January) for a new round of trade talks with US officials, as potential tariffs on cars hold on European industry’s head.

The EU and US negotiating teams are expected to meet in early March in Washington. However, the Europeans said that the continuation of trade talks is conditional on car tariffs being scrapped.

Furthermore, the Commission said that the US must remove levies imposed last summer on European steel and aluminum, as a precondition for concluding the agreement on eliminating tariffs on industrial goods.

EU will eliminate industrial tariffs only if US lifts metal duties

The European Commission has made clear to the US administration that the elimination of industrial tariffs will depend on Washington lifting duties it imposed on EU steel and aluminium last summer.

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