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EU Threats Of Retaliation If US Imposes Auto Tariffs

EU Threats Of Retaliation If US Imposes Auto Tariffs
Amidst rising tensions between the United States and the European Union over trade and trade related regulations, a threat of retaliation has been issued by the EU to the US if the latter foes ahead with its plan of imposing additional tariffs on vehicles imported into the country – including those from the EU.
Margaritis Schinas, a spokesman for the European Commission, told reporters in Brussels earlier in the week that the EU will “react in a swift and adequate manner” if any of the US sanctions happen to hit European exports. The comments from the EU were made a day after a report on the implications of importing of auto parts was placed before the US President Donald Trump. 
Experts in the automotive industry and in the auto parts supply industry are anticipating that the report in the US would likely contain recommendations of import tariffs on vehicles and auto parts into the US of up to 20 per cent to 25 per cent which would impact assembled cars and parts. It is anticipated that the European companies that would be most hit would revenues of Mercedes-Benz, BMW and Volkswagen Group.
In case the Trump administration decides to follow on his earlier announcement of imposition of tariffs on imported assembled cars and auto parts, the EU would initiate imposition of tariffs on US products which would total 20 billion euros ($23 billion) and the list of which has already been prepared by the EU. it is expected that the cross border tariffs would primarily hit Germany because a significant part of its revenues is accounted for by export of vehicles to the US. Over the week end, an senior security officials of the country were presented with an impassioned defense of the country’s car industry by German Chancellor Angela Merkel in Munich. She said that the indication of the Trump administration that the vehicles exported into the US from Europe were a security threat was chocking.
Last year, the US imposed import tariffs on European steel and aluminium before the beginning of the car tariff dispute. The same logic of national security was used by Trump to impose those tariffs earlier. In retaliation, the EU imposed import tariffs on US goods worth 2.8 billion euros and the items included Harley-Davidson motorcycles and Levi Strauss jeans among a host of others. .
A tentative truce reached in July is being dragged into question by the latest and renewed threat about car duties. That truce was worked out at a meeting between Trump and European Commission President Jean-Claude Juncker through a political accord in Washington last year where the two parties agreed to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”
Schinas said that at the July meeting, “we agreed that both the EU and the U.S. would refrain from taking any measures that would go against the spirit and the letter of the joint statement.”
“President Juncker trusts President Trump’s word. The European Union will stick to its word as long as the U.S. does the same.”
There can be significant escalation of trans-Atlantic tensions because of the anticipated U.S. tariffs on European cars because the value of the total auto exports from the Eu to the US is about ten times greater than the export of steel and aluminium exported from eth block to America. Therefore the EU has decided to target those US goods that are exported in large volumes and value into the EU.

Christopher J. Mitchell

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