European Commission warned about Trump’s tariffs on new cars

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The European Commission has warned that the decision of U.S President Donald Trump to extend his trade war on imported cars might have a destructive economic impact. The United States imposed levies earlier this year of up to 25% on U.S imports of European manufactured steel and Aluminum. The U.S President has also threatened large tariffs on imports of European Union cars and car parts, a trade worth around €50bn a year. The trade commissioner of EU, Cecilia Malmstrom said in a speech to the German Marshall Fund in Brussels that at least on steel and aluminum, the world is undeniably facing challenges as a result of global over-capacity – the root cause of which is China. But similar moves on cars would be disastrous.

The Commission published an analysis earlier this month and suggested that the U.S car import tariffs might have an initial negative impact on the U.S GDP of 13-14 billion U.S dollars. But, such levies would also have a major impact on European car firms such as Volvo, BMW, Volkswagen, and Daimler which export heavily to the market of the United States. Volvo recently started a new car assembly plant in South Carolina and it generated at least 1,500 new jobs. But, the engines of the plant are imported from Europe. It means that they would be hit by a tariff on car imports. Malmstrom also pointed out that various European car firms are manufacturing cars in the United States. Trump claims that EU tariffs on U.S car exports of 10% are evidence of trade being rigged against American manufacturers.