The US-European tariff conflict is jeopardizing transatlantic business worth US$9.5 trillion annually, the American Chamber of Commerce to the EU (AmCham EU) warned on Monday.
AmCham EU, whose more than 160 members include Apple Inc, ExxonMobil Corp and Visa Inc, showed in its annual Transatlantic Economy report a deepening relationship hitting records last year, such as goods and services trade of US$2 trillion.
It talks of this year as a year of promise and peril for the world’s largest commercial relationship.
Photo: AFP
In the past week, Washington has imposed tariffs on steel and aluminum, the EU has set out plans for retaliation and US President Donald Trump has threatened 200 percent tariffs on EU wine and spirits.
Trump has railed against the US goods trade deficit with the EU, although there is a US surplus in services, and urged manufacturers to produce in the US.
AmCham said trade is only part of transatlantic commercial activity and that the real benchmark was investment.
“Contrary to conventional wisdom, most US and European investments flow to each other, rather than to lower-cost emerging markets,” it said.
US foreign affiliate sales in Europe are four times US exports to Europe and European affiliate sales in the US are three times higher than European exports.
AmCham warned ripple effects from the trade conflict could damage those close ties.
There was also a risk of spillover into services trade, data flows or energy, with Europe reliant on US liquefied natural gas imports.
“Ripple effects of conflict in the trade space will not be confined to trade. They ripple through all of those other channels and the interactions are quite significant,” the report’s lead author Daniel Hamilton said.
US and European companies had interlinking value chains to be globally competitive, such as BMW AG cars exported from the US.
“I’m not sure you’re going to have isolated investments,” Hamilton said. “That’s just going to make things very inefficient.”
Meanwhile, Trump said he has no intention of creating exemptions on steel and aluminum tariffs, and that reciprocal and sectoral tariffs would be imposed on April 2.
Reciprocal duties on US trading partners would come alongside auto duties, Trump said.
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