Brussels – Increased US import tariffs on Europe’s automotive industry could cost the United States 13-14 billion dollars in gross domestic product, the European Commission has told Washington in a letter published on Monday.
The letter was a contribution to an investigation by the US Department of Commerce into whether vehicle imports harm national security, after President Donald Trump used that argument to justify tariff hikes on steel and aluminium imports.
Negative impact on US GDP
The EU’s internal analysis “shows that an additional import tariff of 25 per cent, applied to automobiles and automotive parts, would in first instance have a negative impact on US GDP in the order of 13-14 billion USD,” the commission wrote in the document submitted on Friday.
It also warned that US tariffs on car imports could prompt trading partners to impose countermeasures on US exports worth almost 300 billion dollars, or around 19 per cent of US exports in 2017.
The US tariffs investigation itself “lacks legitimacy, factual basis and violates international trade rules,” the letter said.
Weakening the bonds with friends and allies
Recent US trade policy “harms trade, growth and jobs in the US and abroad, weakens the bonds with friends and allies,” and shifts the attention away from genuine economic challenges, the commission said.
EU vehicle imports to the US are stable and “do not threaten or impair the health of the US industry and economy,” the letter says, adding that the US automobile industry is “healthy.”
The commission has also asked to participate in a public hearing being organized by the US Department of Commerce on July 19-20, it said.