EU gives stark warning to US over auto tariffs

The European Union warned today that up to USD 294 billion worth of US exports would face counter-measures if President Donald Trump went through with his threat to slap duties on auto imports.

Trump has singled out the Europeans as a problem as great to the US on trade as China and laid out threats to fight the EU with a 20 per cent duty on EU auto imports, a particular source of his scorn.

Trump's threat was the latest salvo in an escalating trade war that saw the EU slap duties on US-made jeans and Harley Davidson motorcycles in a tit-for-tat response to US tariffs on European steel and aluminium exports.

In a letter to US authorities, the European Commission, which handles trade policy for the bloc's 28 members, painted a stark picture of what the US economy would face if Trump followed through on his threat.

"Economic analysis confirms that an increased tariff on these products will be harmful first and foremost for the US economy," the letter said.

The commission said "up to USD 294 billion of US exports... could be subject to countermeasures across sectors of the US economy", which was equivalent to a staggering 19 percent of total US exports in 2017.

The commission also underlined that European car companies were important contributors to the US economy and "well established" there.

"In 2017, US-based EU companies produced close to 2.9 million automobiles, which accounted for 26 percent of total US production," it said.

These companies support 120,000 direct and indirect US jobs in plants across the country, the EU said, pointing to sites in South Carolina, Alabama, Mississippi and Tennessee -- southern US states known for their unwavering support for Trump.