Mr. Trump had threatened to substantially escalate this conflict with another round of tariffs, this time on the automobile industry. European countries, especially Germany, are major exporters to the United States, though they also produce many cars domestically. The United States imported $183.8 billion of cars, sport utility vehicles and minivans last year, $46.6 billion of them from the European Union.
At a hearing in Washington last week, representatives from car companies and foreign governments gave testimony on the proposed tariffs that was almost uniformly negative, punctuated by concerns about rising prices for consumers, shrinking profits for companies and decreased access to markets abroad.
The European Union believes “that this current investigation lacks legitimacy and factual basis and would lead the United States into a breach of international law,” David O’Sullivan, the European Union ambassador to the United States, said at the hearing.
European officials have said they are drawing up a list of additional levies on roughly $20 billion of American products, including food, machinery and high-tech goods, in case the car tariffs go into effect.
But they worry that the tit-for-tat trade actions are merely locking Europe and the United States into a destructive cycle of relations that will leave consumers and companies on both sides of the Atlantic worse off.
Mr. Trump has denounced the European Union for charging a 10 percent tariff on imported cars, running a trade surplus with the United States and maintaining barriers to American farm products, saying this month that the Europeans were “possibly as bad as China” when it comes to trade.
Economists have challenged these claims. They counter that average tariffs across both nations are extremely low, and that the United States trade deficit is more a function of broader economic factors, like the American savings rate, than any specific tariffs. Even in the realm of automobiles, the United States charges only a 2.5 percent tariff on imported cars, but it has a 25 percent tariff on foreign trucks and maintains higher levies on many other products.
