European Union warns Donald Trump he risks $294bn trade tariff reprisals

Donald Trump

The EU sent comments to the USA on whether auto imports pose enough of a threat to US national security to justify tariffs and estimating the economic impact.

The European Commission said the USA investigation into auto imports "lacks legitimacy, factual basis and violates worldwide trade rules", according to CNN Money.

The EU warned in a 10-page submission to the US Commerce Department that imposing import tariffs on cars and vehicle parts would harm the US automotive industry and may lead to retaliatory tariffs on $US294 billion ($401 billion) worth of US exports, almost one-fifth of US exports.

For example, when Trump initially made a decision to start slapping tariffs on foreign governments' goods, White House trade czar Peter Navarro said he didn't think any country would retaliate.

President Donald Trump's trade policy could cost New Jersey companies $920 million in sales, according to a report by the nation's largest business lobby.

But mounting trade tensions have opened a rift with the president.

The EU regards national security arguments as nonsense: In its report, the European Commission warned the United States government that the move would be unacceptable.

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"Economic analysis confirms that an increased tariff on these products will be harmful first and foremost for the U.S. economy", the letter said. They don't want our farm products. It calculated that a 25% tariff would slash an initial $13-14 billion off U.S. gross domestic product, with no predicted improvements to its own incomes.

The European Union says that for some goods, such as trucks, United States import duties are higher. Consider American soybean farmers, who send about 60 percent of their exports to China. The EU, Mexico, Canada, Turkey and India introduced duties on USA products in return.

Although they source boards from United States suppliers "whenever possible, paying up to 30 percent over the price of the same circuit boards made overseas", roughly half of the raw components come from China.

Mr Trump has implemented billions of dollars in tariffs targeted at China, Canada, Mexico and the European Union, saying such moves are needed to offset trade imbalances.

Mr. Trump's secretary of commerce, Wilbur Ross, has hinted the decision on automotive tariffs could come as early as this month.

Trump on Wednesday said he supported tougher restrictions on foreign investment in sensitive technology, as well as export controls on those goods, but he stopped short of imposing specific restrictions on China. "Based on the Tariffs and Trade Barriers long placed on the US and it 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 US", Trump tweeted back in June.

President Donald Trump cited national security concerns for the previous tariffs.

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