European Union warns United States of boomerang effect if Trump imposes vehicle levies

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"All of these factors would substantially increase the costs of exporting passenger cars to these markets from the United States and deteriorate the market access for BMW in these jurisdictions", wrote BMW in its letter, hinting that an increase in automotive tariffs could potentially lead to "strongly reduced export volumes and negative effects on investment and employment in the United States".

General Motors also warned that proposed tariffs on foreign cars and parts could result in fewer cars being built on United States soil.

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 USA tariffs on European steel and aluminium exports.

The European Union has warned Donald Trump that imposing import tariffs on cars would lead to countermeasures on $294bn of United States exports.

The letter also said any auto tariffs would "damage further the reputation" of the USA, according to the FT.

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Canada and the USA are among the world's largest trading partners, with an estimated $673.9 billion in goods and services exchanged in 2017, with the US scoring a small surplus ($8.4 billion), according to USA government data.

Sen. Jeff Flake (R-AZ) called out President Donald Trump for a claim he made about the European Union trade policies during a Sunday morning interview on Fox News. They don't want our farm products.

German automaker BMW has now offered its opinion on the domino effect that newly imposed USA tariffs have brought to the auto industry.

The EU submission also reports a 25 percent tariff could have a $13-14 billion negative impact on US gross domestic product, Reuters reported. Now in all fairness they have their farmers.

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

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Brussels delivered the threat amid growing fears of an escalating trade war, as the USA president targets the bloc and others, including China, as part of a campaign to protect U.S. jobs.

The EU's letter reportedly said that it has not yet decided on countermeasures to possible vehicle tariffs, but said it is "likely" to apply them to "a significant volume of trade" in the event Trump imposes such tariffs.

The European auto industry in the United States supports some 120,000 jobs in its factories that are mainly in the southern region of the country.

That tactic is similar to the EU's retaliation on metals tariffs that came after Trump's administration on June 1 struck Europe as well as allies in Canada, Mexico and elsewhere with tariffs on aluminium and steel.

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