What will happen if Trump goes through with his stated intentions of imposing tariffs on the automobile industry?
Accounting for every market from Europe to Asia that could be impacted by Trump's tariffs, European Union (EU) officials estimate that collective retaliation could total as much as $300 billion.
The EU reportedly sent a letter to the Department of Commerce that says as much.
European Commission spokesman Margaritis Schinas said the U.S. investigation into the possibility of auto tariffs “lacks legitimacy, factual basis and violates international trade rules,” just like last month’s U.S. tariffs on steel and aluminum imports. [...]
“European cars do not threaten or impair the health of the U.S. industry and economy,” Schinas said. He noted that European carmakers create over half a million jobs in the U.S.
In its submission, the EU argues that trade restrictions would likely to lead to higher costs for U.S.-based producers, and in effect become a tax on American consumers.
The EU's estimate that Trump's tariffs on automakers will lead to $300 billion in retaliatory tariffs on American products does not include the retaliatory measures they've already implemented in response to Trump's other tariffs.
I hadn't really thought about the total number before now, but if you add another $300 billion in retaliatory tariffs to what we've already seen, and if you add that to the possibility that Trump will impose tariffs on $400 billion in Chinese goods (assuming China will respond in kind), it's conceivable that we could see nearly a trillion dollars in collective retaliation. And this will move beyond goods to services at some point because America only exports so many goods.
It's easy to see how this could get out of control in a hurry if it isn't already. Trump's belligerent bumbling could shift economic conditions almost overnight and I don't think that's appreciated enough. Most of the media certainly isn't covering it as the real threat that it is.
Between now and November, Republicans in Congress might have to decide if they want to allow Trump to blow up the entire economy on their watch. Our only other hope may be a longshot lawsuit challenging the constitutionality of the Trade Expansion Act of 1962.