(Photo: CGTN)

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 counter-measures by its trading partners on 294 billion US dollars of US exports.

In a 10-page submission to the US Commerce Department sent last Friday, the EU 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 US and for having higher import duties on cars. The EU has a 10 percent levy, compared with 2.5 percent for cars entering the US.

Trump said last week that the government was completing its study and suggested the US would take action soon, having earlier threatened to impose a 20 percent 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 US 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 US tariffs.

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

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

Imports had, it said, not shown a dramatic increase in recent years and grown mainly alongside the overall expansion of the US 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 US auto production by imposing higher costs on US manufacturers. 

The EU had calculated that a 25 percent tariff would have an initial 13-14 billion US dollars negative impact on US gross domestic product with no improvement to its current account balance.

Assuming counter-measures along the lines of those taken in response to existing US import tariffs on steel and aluminum, up to 294 billion US dollars of US exports – 19 percent of overall US exports – could be affected, the submission said.