The European Union has warned the United States that President Donald Trump's threat to impose a 20 percent tariff on imported European cars would seriously hurt the U.S. economy and invite retaliatory levies on up to $294 billion in U.S. exports.
In a 10-page letter sent to the U.S. Commerce Department last Friday, the European Union said that new tariffs on European-made vehicles and auto parts were unjustifiable and would be an economic mistake.
Trump has often attacked the EU trade surplus with the United States — $101 billion last year — and criticized the 28-nation bloc for its 10 percent tariff on U.S. car imports compared to the 2.5 percent levy the U.S. imposes. In late May, Trump ordered the Commerce agency to investigate whether the 20 percent tariff should be imposed on national security grounds, although it was not immediately clear what security concerns there might be.
U.S. Commerce Secretary Wilbur Ross told CNBC on Monday it was "premature" to say whether Trump will go ahead with the tariff increase.
Meanwhile, Trump criticized the World Trade Organization, telling reporters at the White House, "They have been treating us badly for many, many years."
He added, "If they don't treat us fairly, we'll be doing something," but offered no further explanation.
The European Commission, the EU executive that handles trade issues, said Monday, "We'll spare no effort, be it at the technical or political level, to prevent" the United States from imposing the higher tariffs on European car imports. Jean-Claude Juncker, the commission's president, is headed to Washington later in July in an effort to try to persuade Trump officials to back off the new levies.
"We should de-dramatize these relations," Juncker told a news conference last week.
On Sunday, Trump attacked EU trade practices, telling Fox News, "The European Union is possibly as bad as China, only smaller. They send a Mercedes in, we can't send our cars in. Look what they do to our farmers. They don't want our farm products. Now in all fairness they have their farmers. ... But we don't protect ours and they protect theirs."
Europe sent $43.6 billion worth of vehicles to the U.S. last year, compared to $7.1 billion worth of cars the U.S. shipped to Europe. In addition, the European Union says European companies manufactured nearly 2.9 million cars in the United States, directly supporting 120,000 U.S. jobs, or 420,000 jobs if car dealerships and car parts retailers are included.
The U.S.-EU tariff dispute on cars comes at a time Trump has feuded with the European Union, China and Canada over his imposition of new levies on steel and aluminum imports to the U.S.
Last week, the EU retaliated by imposing 25 percent tariffs on U.S. motorcycles, orange juice, bourbon, jeans and other products.
Canada said Sunday it has imposed higher tariffs on $12.6 billion worth of U.S. steel products, toffee, maple syrup, coffee beans and strawberries.
China and the United States, the world's two biggest economies, are set Friday to impose tit-for-tat higher tariffs on $34 billion worth of goods the two countries export to each other.