Europe ready to retaliate if U.S. imposes auto tariffs - EU trade chief

By David Lawder

WASHINGTON (Reuters) - European Union Trade Commissioner Cecilia Malmstrom said on Wednesday that the EU has a list of potential retaliation targets ready in case U.S. President Donald Trump imposes auto tariffs on the bloc's member states.

Malmstrom told reporters after a meeting with U.S. Trade Representative Robert Lighthizer that they did not speak specifically about auto tariffs, but focused instead on regulatory cooperation issues and ways to enable EU countries to import more American soybeans and liquefied natural gas.

Malmstrom did not specify the U.S. products on which the EU would levy retaliatory tariffs, as consultations with member states would need to take place, but she said the list could include "all kinds" of products.

"It could be cars, it could be agriculture, it could be industrial products - it could be everything. And we will do that, but hope we don't have to get to that situation," she said.

Malmstrom also said that the EU is willing to negotiate a limited trade deal on industrial goods, including autos, that seeks to bring tariff rates to zero for both the United States and Europe.

But the scope of these talks cannot be defined until early 2019, when the USTR completes its consultation process with Congress and the EU receives a negotiating mandate from member states, she added.

Trump administration officials on Tuesday said the president's trade team made no decisions on how to proceed with new recommendations from the Commerce Department on whether to impose tariffs on autos and auto parts to protect the U.S. industry on national security grounds. The contents of the recommendations have not been disclosed.

An influential automotive trade group warned on Wednesday that increased U.S. autos tariffs will erode the benefits of tax cuts and the new U.S.-Mexico-Canada Agreement trade deal.

"If implemented, increased auto tariffs would not only undermine the potential success of the USMCA, they would also pose a material threat to the economy and may result in the loss of as many as 700,000 jobs across the U.S.," the Alliance of Automobile Manufacturers said in prepared testimony for a hearing on Thursday before the U.S. International Trade Commission.

The group, which represents both Detroit-based and foreign automakers, said it "strongly encourages" the administration to drop its national security probe on autos.

It added that side-letters to the USMCA providing Canada and Mexico with tariff-free import quotas of 2.6 million vehicles each in the event Trump imposes car tariffs indicate that the administration intends to do so.

(Additional reporting by David Shepardson; editing by Chizu Nomiyama, Andrea Ricci and G Crosse)