German automakers are willing to abandon car tariffs between the European Union and the U.S. in exchange for President Donald Trump dropping a 25 percent border tax threat on European auto imports, according to The Wall Street Journal.
Richard Grenell, U.S. ambassador to Germany, was expected to meet with Trump's administration on Wednesday, the paper said.
Citing sources, The Wall Street Journal said German automakers support the EU's 10 percent tax on auto imports from the U.S. and a 2.5 percent duty on auto imports going away if Trump backs off the threat of imposing a 25 percent border tax on auto imports coming from Europe.
Grenell reportedly has met with executives from German automakers including Daimler, BMW and Volkswagen Group. The three companies have plants in the U.S. and employ thousands of U.S. workers here.
The Europeans also want to ax a 25 percent tax on imports of pickups, crossovers, SUVs and big vans, according to the report.
Daimler confirmed to The Wall Street Journal the meeting with Grenell, but declined to comment any further. Volkswagen did not immediately comment to the paper, while BMW said it supports free trade with "minimal or no barriers."
Trump in his presidential campaign and during his presidency has voiced support of U.S.-made vehicles and U.S. auto jobs.
New 25 percent U.S. tariffs on imported steel and 10 percent tariffs on imported aluminum recently went into effect, impacting the EU as well as Canada and Mexico.
The European Union, meanwhile, will begin charging import duties of 25 percent on a range of U.S. products on Friday, in response to U.S tariffs imposed on EU steel and aluminum early this month, the European Commission said on Wednesday.
The move confirms a tit-for-tat dispute that could escalate into a full trade war, particularly if Trump carries out his threat to penalize European cars.
The commission formally adopted a law putting in place the duties on 2.8 billion euros ($3.2 billion) worth of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.
Reuters contributed to this report.