In a communication received by the Commerce Department of the United States of America, the European Union warned that imposing import tariffs on automobiles and auto car parts could result in the downfall of the US automotive industry, and hinted at the likelihood of counter-measures on almost $300-billion worth of US exports.
Back in May, the Commerce Department under President Donald Trump launched an investigation on the duty imposed on vehicles. Then, the EU had a 10% levy on cars from the US, while the US imposed just 2.5%.
Following criticizing the EU, President Trump last week threatened to impose 20% in tariff on all EU-assembled cars. In 2017 alone, the EU exported $43.6-billion worth of cars to the United States in 2017.
However, according to the EU, US import duties are higher for trucks. EU companies claim to have made 2.9 million cars in the US – supporting 120,000 jobs, excluding dealerships and maintenance.
According to the European Union, a 25 percent tariff would spur a $13-14 billion negative impact on the US GDP initially. The bloc also noted zero improvements to the current account balance.
Auto stocks screech and they come down crashing
Last week, automakers in the US and Europe are starting to feel the heat of President Trump’s latest tariff attack, levying up to 20% tax on vehicles imported from the European Union. Though the move was widely expected, the high tariff rate has triggered serious concerns about the diplomatic and business ties between the US and Europe.
Shares of BMW and Daimler, the maker of Mercedes Benz, tanked in the European stock markets following the announcement today, while Volkswagen and Fiat managed to recoup their initial losses later. In the US bourses, Ford (F) and General Motors (GM) suffered losses, but the latter recovered slightly as trading progressed.
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