European Commission President Jean-Claude Juncker will meet President Donald Trump in Washington next week to explore the possibility of starting negotiations on reducing car tariffs for several key trade partners, according to two people with knowledge of the plans.
Juncker will likely signal the EU's willingness to consider a so-called plurilateral sectoral deal to reduce car tariffs between the two sides as well as other major car-exporting countries, said one of the officials, who asked not to be identified because preparations for the meeting are ongoing.
Such a deal, which would have the potential to upend the auto industry, would take time to complete and officials said they aren't optimistic Trump would accept it. The EU is seeking to head off a U.S. probe into whether imports of light vehicles and auto parts damage national security, which could culminate in a Trump proposal to impose a 20 percent tariff on cars and light trucks.
Washington has already hit the EU with duties on steel and aluminum exports using the same national-security justification. Juncker is seeking to tamp down the brewing conflict a month after the 28-nation bloc imposed levies on 2.8 billion euros ($3.3 billion) of American imports due to the metal tariffs.
"President Juncker and President Trump will focus on improving trans-Atlantic trade and forging a stronger economic partnership," the European Commission said in a statement Tuesday announcing the July 25 meeting. The stand-off over light-vehicle duties has rattled automakers, with the Stoxx 600 Automobiles & Parts Index down about 9 percent this year.
The EU will use Juncker's meeting to work out how to proceed, with member states divided, according to the other official. Germany, which shipped 640,000 cars and light trucks to the U.S. last year, is eager to negotiate a solution with Trump while French officials consider the new auto tariffs a foregone conclusion.
While some EU member states, including France, resist such a sweeping global deal on cars, there’s no other legally possible concession the bloc can offer to appease Trump, according to one of the officials. Even as Juncker won’t have a mandate to make a binding offer to Trump, he will float this option as this is the solution that the EU’s executive arm considers to be realistic, the official said.
German Chancellor Angela Merkel said in a July 5 speech that the EU could reduce car tariffs as part of a broad free-trade agreement, which would have to include about 90 percent of commerce between the two regions. Alternately, the EU and U.S. could lower duties, which would be offered to all other WTO partners, she said.