Europe's tariffs on American exports take effect

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On Friday, the European Union invoked what it called "rebalancing measures" - raising duties on US steel and aluminum products, agricultural goods and other products - in response to USA global tariffs on steel and aluminum imports.

The goods targeted include typical American products such as bourbon, peanut butter and orange juice, in a way that seems designed to create political pressure on President Donald Trump and senior USA politicians.

The U.S. Commerce Department has a deadline of February 2019 to investigate whether imports of automobiles and auto parts pose a risk to U.S. national security.

Trump imposed tariffs of 25 per cent on European Union steel and 10 per cent on aluminum on June 1.

The Japanese yen strengthened to 110.02 against the dollar, up as much as 0.47 percent on the day, after President Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods, fuelling trade war worries with Beijing.

Trump's tweet sent shares of BMW, Volkswagen, Fiat Chrysler and Mercedes lower, and Ford and General Motors shares also slipped following the news, CNBC reported.

In an interview with Business Insider Germany last week, Bernhard Mattes, the president of German Association of the Automotive Industry (VDA), said that tariffs would not only hurt European automakers but the United States economy as well. Shares of U.S. automakers Ford Motor Co and General Motors Co fell immediately after Trump's tweet but rebounded and closed higher. "Free trade has made BMW's success and our investments and the jobs we sustain in the U.S. possible". According to the Peterson Institute for International Economics, a 25% tariff on imported autos to the U.S. would result in the loss of 195,000 United States auto workers' jobs.

Most economists say the effect of higher global import tariffs will drive up costs for consumers, offsetting much of the benefit of protecting domestic industries for the country imposing them.

Wednesday, Cecilia Malmström, European Union commissioner for trade, said although the bloc didn't want to tax the United States, they had no choice. Duties at this level could be expected roughly to reduce USA imports of vehicle and auto parts in half.

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One of the most frequently discussed items on the EU's list is bourbon, a specialty from Kentucky, the home state of Senate Majority Leader Mitch McConnell, a Republican.

Meanwhile, the US Chamber of Commerce noted that American auto production has doubled over the past decade, and said tariffs "would deal a staggering blow to the very industry it purports to protect and would threaten to ignite a global trade war".

The U.S. had a surplus in services trade with the European Union of $45 billion in 2017, according to the memo, citing U.S. statistics.

The trade barrier would also hit the U.S. economy and could result in "upwards of 180,000 jobs lost" and the impact could be doubled by countermeasures, the commission said in the memo.

The EU tariffs, which took effect at midnight (2200 GMT Thursday) according to the EU s official journal, will further fuel jitters on world stock markets that are already alarmed by trade tensions between the United States and China.

The U.S. already taxes imports of European cars at a rate of 2.5 percent. It followed his address to a "Make America Great Again" rally in Minnesota earlier this week, in which he denounced the European Union for saying "we're going to sell you millions of cars, by the way, you're not going to sell us any". Automotive News data shows about 7.2% of vehicles sold in the US through May were assembled in Europe.

Pompeo made the comment as part of his prepared remarks at the SelectUSA Investment Summit just outside Washington, where he promoted the United States' business climate and investment opportunities, saying the country is "truly open for business".

The organisation estimates that a 25% tariff on foreign vehicles and parts for them, assuming the U.S. does not grant exemptions to some countries, would lead to the loss of about 195,000 jobs in the US.

As painful as the brewing trade war could prove, many have seen it coming.

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