Tensions between the US and European Union could take a “nasty turn” which has the potential to have a big impact on the economic stability of the bloc, researches at investment giant Redbird has said. Analysis has found Washington could wipe a massive £12.9billion (€14.5bn) off Berlin’s GDP if its imposes US taxes on car imports. Concerns have already been raised over the strength of the EU’s largest economy following the release of officials figures.
In April industrial production fell by 1.9 percent compared with the previous month and exports were 0.5 percent lower than in 2018.
Due to the slowdown in the economy, the Bundesbank has also revised its forecasts and is now predicted growth of just 0.6 percent, instead of the 1.6 percent it made back in December.
The European Union has until November to sweat on whether Mr Trump will press ahead with the new sanctions.
By then the UK should have left the EU and the Tory leadership contest has so far been a back-and-forth battle over which candidate would and would not leave the bloc without a deal on October 31.
A no deal Brexit will leave Britain free to strike its own independent trade deals under World Trade Organisation (WTO) rules.
However it would face the EU’s external tariffs which could increase the price of everyday goods.
Although free from the shackles of the EU, Britain could also face similar trading problems due to complex “most favoured nation” rules.
The UK would be able to trade with 164 WTO member nations, but Britain would not be able to lower tariffs to a specific country unless it had agreed a trade deal.
In terms of the motoring industry, the Government has outlined plans to increase tariffs on cars from the EU by 10 percent under WTO.
As a result the typical family car would cost an extra £1,500.
The US is no stranger to a trade war and its ongoing dispute with China could reduce global trade by one percent according to Bundesbank President Jens Weidmann.
Mr Weidmann, following a meeting with G20 finance ministers and central bank governors, said: “The world economy is suffering a lot from the uncertainty.”