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President Donald Trump’s decision to delay imposing tariffs on the European Union’s auto industry comes as a welcome relief to manufacturers, but the threat will hang over EU-U.S. trade relations and business sentiment in the region this year. According to Bloomberg Economics, 0.4% of all value produced in the euro area ends up in cars and car parts exported to U.S., and 8.6% of the transport industry output. The overall economic shock from U.S. tariffs would be manageable, but at a time when Europe’s car industry is struggling to recover from challenges including tougher fuel emission standards and slower global demand, another blow is the last thing it needs.
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