The European Union has warned Washington against raising taxes on cars imported from Europe, saying that this would necessitate a strong retaliation from Brussels.
In a letter to the US authorities, seen by the Financial Times, the European Commission cautioned the United States that if they implement their threats to impose customs duties on foreign automobiles, the American economy would be the to feel the pain as the EU would target US automotive products in return.
The letter comes in the context of increasingly tense trade relations between the US and the EU after Donald Trump’s decision to impose taxes of 25 percent on steel and 10 percent on aluminum products.
The EU responded by implementing additional tariffs on dozens of US products. In its letter to the US authorities, the European Commission, said it believes that the United States risks retaliation from its trading partners that could affect up to $ 294 billion in US goods, equal to 19 percent of US exports in 2017.
“In 2017, US-based EU companies produced nearly 2.9 million cars, accounting for 26% of total US production,” the letter adds. “These companies support 120,000 direct and indirect jobs in US plants across the country,” it continues, referring sites in South Carolina, Alabama, Mississippi and Tennessee – all southern states, known for supporting Donald Trump.
On Friday, following a summit in Brussels, German Chancellor Angela Merkel, whose high-exporting country has the most to fear among EU member states from escalating tensions with Washington, has assured that Europe “would try to do everything possible to avoid a trade war.”
The President of the European Commission, Jean-Claude Juncker, is due to visit Washington by the end of July to “present the European point of view” to Donald Trump. “We need these relationships. The United States needs these relationships, Juncker said on Friday in Luxembourg. “I am not sure that we will reach an agreement but we will try.”