Trump trade row: EU considers tax on Levi jean imports

 In U.S.
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Media captionCecilia Malmström, EU Commissioner for Trade

Levi jeans and bourbon could be hit with a 25% import tax by the European Union if President Donald Trump imposes tariffs on European steel and aluminium.

Cecilia Malmström, EU Commissioner for Trade, told the BBC the items were on a draft list of US goods to be taxed.

Last week, the President said he would tax imported steel, declaring: “trade wars are good”.

His comments have prompted reaction around the world.

Prime Minister Theresa May expressed her concern in a telephone call to Mr Trump on Sunday.

Levi Strauss came out strongly against trade barriers.

A company spokesperson told the BBC: “We support open markets and free trade where everyone plays by the rules. Unilateral tariff impositions risk retaliation and destabilizing the global economy, in which case American brands, workers and consumers will ultimately suffer.”

What is the EU considering?

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Ms Malmström told the BBC: “We are looking at possibilities to retaliate, meaning we will also put taxes or tariffs on US imports to the European Union.”

She said they would wait for the final decision, but added that “we are of course preparing. This has been in the air for some time”. She said that if the US went ahead and applied taxes to European steel, the EU would take the issue to the World Trade Organization (WTO).

Ms Malmström stressed that Europe was looking to respond “to retaliate but not escalate”.

But any action by Europe is likely to provoke further action by the US.

Has there been any impact on European business so far?

Shares in major European car makers fell on Monday following a threat by US President Trump to tax their vehicles.

Mr Trump said if the EU “wants to further increase their already massive tariffs and barriers on US companies… we will simply apply a tax on their cars”.

The US is an important market for cars built in the country. US demand for British-built cars rose by 7% in 2017, with exports reaching almost 210,000, and the US is now the UK’s second-largest trading partner after the EU, taking 15.7% of car exports.

What does Trump want to do and why?

Mr Trump has decried the “$800 Billion Dollar Yearly Trade Deficit because of our ‘very stupid’ trade deals and policies”, and vowed to end it.

On Thursday, he said steel imports would face a 25% tariff and aluminium 10%.

Then came Saturday’s threat on EU-made cars.

In January, he had already announced tariffs on solar panels and washing machines.

What are US’s trading partners making of this?

Downing Street said that during Mrs May’s call to President Trump on Sunday she raised “our deep concern at the President’s forthcoming announcement on steel and aluminium tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests.”

Zhang Yesui, spokesperson for China’s National People’s Congress, said it was natural that “some friction will exist” between the US and China, given the volume of trade between them surpassed $580bn (£420bn) last year.

But he said China would take “necessary measures” if its interests were hurt.

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