Skip to main content

Subaru Outback vehicles move down the assembly line at the Subaru of Indiana Automotive Inc. manufacturing facility in Lafayette, Ind.

Daniel Acker/bloomberg

The European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to countermeasures by its trading partners on $294-billion of U.S. exports.

In a 10-page submission to the United States Commerce Department sent last Friday, the European Union said tariffs on cars and car parts were unjustifiable and did not make economic sense.

The Commerce Department launched its investigation, on grounds of national security, on May 23 under instruction from President Donald Trump, who has repeatedly criticized the EU over its trade surplus with the United States and for having higher import duties on cars. The EU has a 10 per cent levy, compared with 2.5 per cent for cars entering the United States.

Story continues below advertisement

Trump said last week that the government was completing its study and suggested the United States would take action soon, having earlier threatened to impose a 20 per cent tariff on all EU-assembled cars.

The European Commission, the EU executive that handles trade for the bloc, said on Monday it was trying to convince its U.S. counterparts that imposing such tariffs would be a mistake.

“We’ll spare no effort, be it at the technical or political level, to prevent this from happening,” a spokesman for the Commission told reporters, adding that Commission President Jean-Claude Juncker’s trip to Washington later this month would seek to stop any new U.S. tariffs.

Related: Donald Trump, Justin Trudeau dig in for long trade fight over NAFTA

The bloc exported 37.4 billion euros (US$43.6-billion) of cars to the United States in 2017, while 6.2 billion euros worth of cars went the other way.

The European Union says that for some goods, such as trucks, U.S. import duties are higher.

In its submission, the EU said EU companies make close to 2.9 million cars in the United States, supporting 120,000 jobs – or 420,000 if cars dealerships and car parts retailers are included.

Story continues below advertisement

Imports had, it said, not shown a dramatic increase in recent years and largely grown alongside overall expansion of the U.S. car market, with increased demand that could not be met by domestic production.

The submission said that tariffs on cars and car parts could undermine U.S. auto production by imposing higher costs on U.S. manufacturers. The EU had calculated that a 25 per cent tariff would have an initial $13-14 billion negative impact on U.S. gross domestic product with no improvement to its current account balance

Assuming countermeasures along the lines of those taken in response to existing U.S. import tariffs on steel and aluminum, up to $294-billion of U.S. exports – 19 per cent of overall U.S. exports – could be affected, the submission said.

The submission also said that the link between the automotive industry and national security was “weak.” Military vehicles, such as the Humvee, were made by different, more niche producers.

Report an error
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter