Trump Threatens 20% Tariff on European Cars, Seeks More U.S. Production

China and US trade talks

China and US trade talks

"We are left with no other choice", Malmstrom said in a statement.

The total amount of United States goods exported to China amounted to only US$130 billion (S$177 billion) a year ago, meaning that Mr Trump's potential tariffs on US$250 billion or more of Chinese imports can not be matched, at least directly.

The move confirms a tit-for-tat dispute that could escalate into a full trade war, particularly if US President Donald Trump carries out his threat to penalise European cars.

The European Union will start imposing duties on a list of US products as of Friday in response to President Donald Trump's decision to slap tariffs on steel and aluminium imports from Europe.

Mexico has announced it will, in response, impose tariffs on USA imports, including pork bellies, apples, grapes, cheeses and flat steel, among other products. "However, the unilateral and unjustified decision of the USA to impose steel and aluminium tariffs on the European Union means that we are left with no other choice", the bloc's trade commissioner Cecilia Malmstrom said in a statement on Wednesday.

The EU trade commissioner has acknowledged that the EU targeted some iconic American items to put political pressure on U.S. President Donald Trump and senior U.S. politicians.

The US and European Union have imposed mutual tariffs.

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"The rules of worldwide trade that we have developed over the years with our American partners can not be violated without a reaction from our side", Malmstrom said.

The tariffs will hit $3.2 billion in USA imports to the European Union. The White House has invoked the same rationale in assessing tariffs earlier this month on steel and aluminum imports.

"We've never seen anything like this", said Mary Lovely, a Syracuse University economist who studies worldwide trade - at least not since countries tried to wall themselves off from foreign competition during the Great Depression.

For Americans, new auto tariffs would likely mean higher car prices for both imported and domestically manufactured vehicles.

Trump has also started a trade fight with China over Beijing's sharp-elbowed efforts to overtake US technological dominance. Trump said he would then retaliate against any counterpunch from Beijing by targeting an additional $200 billion in Chinese products, and then yet another $200 billion if China refused to back down.

The commission formally adopted the new tariffs, allowing them to come into effect on June 22.

"The EU has a responsibility to stand up for open global trade". Canada's retaliatory measures begin on July 1, and Mexico and other nations have also announced they will respond. "The president has made it very hard for other countries to give him what he wants".

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