Donald Trump will put a “tax on the American people” if he goes ahead with a threat to hit European carmakers with punitive tariffs, the European Union has warned.



In a hard-hitting paper, the European commission said Trump’s tariffs would be “self-defeating and would weaken the US economy”, estimating that almost $300bn (£228bn) worth of US goods could be hit by countermeasures.

Eurozone factory output hits 18-month low amid tariff fears Read more

The warning comes in the commission’s first detailed response to the US department of commerce following Trump’s threat to hit imports of European cars with tariffs.



“The European Union is possibly as bad as China, only smaller,” the US president told Fox News on Sunday. “They send a Mercedes in, we can’t send our cars in,” he claimed.



The EU imposes a 10% tariff on US-built cars, while the US levies a 2.5% tariff on cars assembled in Europe and a 25% tariff on European-built vans and pick-up trucks.

The US leader promised to unleash tariffs on European car imports after the EU retaliated against his tariffs on steel and aluminium, sparking fears of a trade war that pushed stock markets around the world into the red on Monday.



In a sign of the EU’s deepening alarm about Trump’s unilateral approach, the paper argues that the White House is again risking the US’s international reputation.

“The European Union would therefore caution the United States against pursuing a process which could result in yet another disregard of international law, which would damage further the reputation of the United States and which the international community cannot and will not accept.”

EU leaders who met the US president at a tense G7 summit in Canada were rattled by Trump’s disregard for the post-1945 world order, his mocking tone and bellicose rhetoric.

That summit did lead to an invitation from the White House to Jean-Claude Juncker, the European commission president, to visit Washington. Juncker is due to meet Trump in Washington before the end of July, a Brussels spokesman confirmed on Monday.

Speaking last month about his recent encounter with the US president, Juncker said Trump had told him: “Jean-Claude – you are a brutal killer.’” Juncker, a former prime minister of Luxembourg, added: “I think he meant it as a compliment but I am not sure.”

According to the commission analysis, European carmakers in the US produce 2.9m cars, about 26% of US production, supporting 120,000 US manufacturing jobs and 420,000 dealership jobs. EU-owned companies in the US export 60% of their production, helping the country’s trade balance, the paper states.



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Some European observers expect Trump to announce his decision on car tariffs before the midterm elections in November, in a bid to boost the chances of Republican candidates running for Congress and in state elections. The US commerce department is due to hold hearings on car tariffs in July and expected to complete its investigation into car imports later this summer.

European carmakers are worried that escalating measures will play havoc with global supply chains, damaging companies on both sides of the Atlantic. “I am hoping that when … it becomes very obvious that even US industry doesn’t want this, that that would give pause for thought and perhaps a reconsideration of the measures,” Jonathan O’Riordan, the international trade director at the European Automobile Manufacturers Association, said. “However, we are concerned.”

In its latest paper, the EU steps up its criticism of the US for using national security as the reason for sanctions, asserting that this argument is baseless and “harms trade, growth and jobs in the US and abroad, weakens the bonds with friends and allies, and shifts the attention away from the shared strategic challenges that genuinely threaten the market-based western economic model”.

