Texas will be among states hardest hit in trade war, EU ambassador warns
The tariff wars continued to snowball this week after President Donald Trump said he would impose a 25% tariff on all imported automobiles and parts, on top of the existing tariffs already in place on the European Union, Canada, Mexico and China.
International leaders pushing back on the tariffs have repeatedly warned it will be not only be citizens in their nations that will pay the price, but American consumers, workers and small businesses.
And Texas could find itself the state most harmed by the emerging trade wars.
"Texas is the biggest trading partner in the whole U.S. for the European Union. The European Union invested in Texas more than $300 billion," EU Ambassador to the U.S. Jovita Neliupšienė told Fox News Digital.
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The ambassador confirmed that, in terms of trade in goods and services, the EU invests $100 billion a year.
"Because of this trade and investment, 300,000 people are employed only because of the EU," Neliupšienė said.
"And if we look even deeper, if you look at how much people are paid in those jobs, and if you compare other foreign investors in Texas or across the country, you would see that European companies, European-invested companies, usually produce better paid [jobs] on average."
It remains unclear what the broader effect will be after Trump imposed steel and aluminum tariffs on the EU, coupled with potential reciprocal tariffs.
Texas Gov. Greg Abbott and senators John Cornyn or Ted Cruz did not respond to Fox News Digital’s questions about how Texans could be among Americans most harmed by tariff wars.
The White House, however, told Fox News Digital, "Tariffs are a critical piece of President Trump’s America First economic agenda, but just one piece."
"The Trump administration is also slashing regulations, unleashing American energy and pushing tax cuts for everyday Americans, including the president’s call for a new tax deduction for American-made cars," White House spokesman Kush Desai said.
"Lower gas prices and a positive February jobs report, which included 10,000 new manufacturing jobs, are indicative of how President Trump is unleashing historic economic, job, wage and investment growth for the American people with no inflation – just as he did in his first term."
In the short term, Neliupšienė said Trump's tariffs will have an immediate effect on costs and pointed to one of the smallest and most affordable products found across the U.S. — nails.
The ambassador explained that when every single nail has a 25% increase in its price, that cost doesn’t just get passed on to consumers. It will raise construction costs across the board. The cost of development projects will then go up, which means the cost to rent office spaces, apartments or the purchase of a new build will increase, a factor that will have resounding consequences across multiple sectors.
Neliupšienė said a tariff battle that played out in 2018 during the first Trump administration on steel and aluminum meant the EU ended up importing nearly a third less of its products from the U.S.
"There is not really an immediate gain from the tariffs. It's usually a loss for consumers … because the prices are all going up. And, in general, loss because of the supply chains are crippled," Neliupšienė added.
But it’s not just steep tariffs on steel and aluminum that are going to have consequences for American pockets.
Trump this week also announced a 25% tariff on all foreign automobiles and parts, a tax that will have a major effect on imports from Canada, Germany, Japan, Mexico and South Korea.
Trump has argued he wants to bring car manufacturing back to the U.S., but some have argued the U.S. does not have the existing infrastructure in place to immediately compensate for the amount of cars imported into the U.S., which amounts to nearly half of U.S. car sales.
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"While I agree with the goal of these tariffs to bring American auto jobs home, I’m still very concerned that, especially coupled with the President’s tariffs on Canada, they could drastically raise the price of cars for Americans who are already struggling with high costs," Sen. Gary Peters, D-Mich., told Fox News Digital.
"We need to focus on implementing a comprehensive strategy that incentivizes long-term investment in U.S. auto manufacturing," he added. "This sporadic, piecemeal approach and targeting our trade allies like Canada will only cause more chaos and uncertainty for American automakers who need stability to thrive and support their workers."
Car buyers in states like Michigan, California and Texas will be the most financially harmed by tariffs that will begin to be enforced April 3 and, combined, they reportedly account for nearly half of all U.S. car imports.
Trump has also threatened to impose more "reciprocal tariffs" April 2 in what he is calling "liberation day" in response to nations that have reacted to his tariffs with their own taxes, but it remains unclear how those will play out.
"I deeply regret the U.S. decision to impose tariffs on European automotive exports," Ursula von der Leyen, president of the European Commission, said in a statement this week. "Tariffs are taxes — bad for businesses [and] worse for consumers equally in the U.S. and the European Union."
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Leaders in the EU have said they will wait to see what Trump's next steps are, but reports Thursday suggested the EU and Canada could take steps to try and safeguard their economies against Washington’s unpredictability.
Trump took to his social media platform to preemptively counter this step, saying, "If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!"