EU Threatens to Hit U.S. With $23 Billion in Tariffs If Trump Taxes Cars

http://fortune.com/2019/01/23/eu-trump-tariffs-cars/

The European Union is prepared to hit 20 billion euros ($22.7 billion) of U.S. goods with tariffs should President Donald Trump follow through on a threat to impose duties on EU cars and auto parts, said a senior trade official for the bloc.

The assertion by Jean-Luc Demarty, director general for trade in the European Commission, the EU’s executive arm, highlights the risk of a sudden escalation in trans-Atlantic commercial tensions following a truce struck six months ago.

“We shall continue to face a U.S. administration that is content to threaten trade measures even against close allies and partners and, in general, to disrupt the status quo in pursuit of its goals,” Demarty told a European Parliament committee on Wednesday in Brussels. “We should stay calm.”

The metal duties as high as 25% prompted tit-for-tat retaliation by the EU last year on 2.8 billion euros of imports of a range of U.S. products including Harley-Davidson motorcycles (HOG, -1.32%), Levi Strauss & Co. jeans, and bourbon whiskey, with the bloc reserving the right to target a further 3.6 billion euros of American goods by late March 2021.

U.S. tariffs on European cars and auto parts would mark a significant escalation of trans-Atlantic tensions because the value of EU automotive exports to the American market is about 10 times greater than that of the bloc’s steel and aluminum exports combined. As a result, European retaliatory duties would target a bigger amount of U.S. exports to Europe.

A 25% U.S. levy on foreign cars would add 10,000 euros to the sticker price of European vehicles imported into the country, according to the commission.