EU May Try to Prevent Trade War with US through International Car Tariff Talks – Report
The European Commission, the EU executive which is in charge of the Union’s global trade relations, is mulling initiating international talks for slashing import tariffs on cars to prevent an all-out trade war with the United States, according to a report.
The report comes against the backdrop of US President Donald Trump’s recent statements that America should impose a 20% tariff on EU-made cars, and a warning by the European Commission to the US Department of Commerce that the EU might respond by taxing US exports worth USD 294 billion.
The US presently has a 2.5% tariff on car imports, while the EU duties stand at 10%. However, the EU argues that US levies on other goods such as trucks are higher.
In 2017, the EU exported cars worth EUR 37.4 billion (USD 43.6 billion) to the United States, while the US cars exports to the EU were worth EUR 6.2 billion, approximately six times smaller.
The European Commission is considering spearheading global car tariff talks among the world’s leading exporters, namely the EU, the US, Japan, and South Korea, The Financial Times reported on Wednesday, citing three unnamed diplomats with knowledge of the matter.
The motion for possible global car tariff talks comes ahead of a meeting set for late July in Washington, D.C., between European Commission President Jean-Claude Juncker and US President Donald Trump.
“[The European Commission] is studying whether it would be feasible to negotiate a deal with other big car exporters such as the US, South Korea and Japan,” one of the sources is quoted as saying.
The rationale behind the motion is that such a deal would help address Trump’s concerns about an “unfair” treatment of the US car industry.
“Under such a deal, participants would reduce tariffs to agreed levels for a specified set of products — a concept in international trade known as a ‘plurilateral agreement’ that lets countries strike deals on tariffs without including the entire membership of the WTO,” the FT said.
The cited sources made it clear that for the time being it was not certain that the EU would pursue an international car tariffs deal as some of the member state capitals were still being sounded out.
“[Mr Juncker] has not yet decided what to discuss at the meeting with President Trump, [and] will develop his thinking and his strategy in the coming weeks,” the Commission is quoted as saying.
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