BERLIN -- The German Chambers of Industry and Commerce gave a cautious welcome to solutions proposed by U.S. President Donald Trump and European Commission President Jean-Claude Juncker to avert a trade war, but warned that U.S. auto tariffs were not completely off the table yet.
After a White House meeting on Wednesday, Trump and Juncker said they agreed to hold sweeping talks on reducing tariff, subsidy and non-tariff barriers, with Trump appearing to give ground on his threat to impose a 25 percent tariff on imported cars and auto parts.
Eric Schweitzer, German Chambers of Industry and Commerce president, said it was up to the U.S. now to rebuild a basis of trust with Europe, and remove the tariffs. "The proposed solutions move in the right direction, but a significant portion of skepticism remains," he said in a statement.
"Without strong European answers, there is a danger that only we will make concessions and in response face new unreasonable demands from the USA," Schweitzer said, calling for a comprehensive agreement that followed the guidelines of the World Trade Organization (WTO).
Schweitzer said European companies faced other non-tariff barriers to doing business in the United States, for instance in winning government contracts, or due to the different regulations in various U.S. states.
Germany's VDA automotive association said the agreement to take steps to ease the threat of a transatlantic trade war offered a real opportunity to avert further tariffs. "This signal of de-escalation is important and a step forward," it said. “Now it’s about putting meat on the bones of the agreement and quickly beginning negotiations,” VDA President Bernhard Mattes said.
Germany, home to big automakers such as Volkswagen, BMW and Daimler, would be hard hit by car tariffs, and the automotive industry has warned such measures could hike vehicle costs by $83 billion and result in the loss of hundreds of thousands of jobs. Germany's car industry accounts for some 800,000 jobs.
Auto tariffs of 25 percent would add about 10,000 euros ($11,700) to the sticker price of a European-built car sold in the U.S., according a European Commission assessment obtained by Bloomberg News last month. That would cut U.S. imports of European cars and car parts in half, the commission forecast.
German Economy Minister Peter Altmaier hailed the deal as a breakthrough, saying the measures agreed by Trump and Juncker could help avoid a trade war and save millions of jobs.
U.S. import tariffs of 25 percent on steel and 10 percent on aluminum imposed in March will stay in place during the talks and Trump said Europe had agreed to raise purchases of liquefied natural gas and lower trade barriers to American soybeans.
Trump says a 10 percent tax on imports of cars to the EU is too high compared with the 2.5 percent rate charged by the U.S., and he’s also been critical of the EU over its $150 billion trade surplus with the U.S.
Marcel Fratzscher, head of the Berlin-based DIW economic institute, said the meeting had produced “a de-escalation but not yet the all-clear” and warned of U.S. possibly “manipulating” the World Trade Organization for its own goals and “further weakening multilateralism.”
The truce may prove to be short-lived if the U.S. and EU cannot resolve their differences over trade in vehicles and car parts. In May, Trump abandoned a framework for trade negotiations with China within days of it being announced, before ratcheting up tariffs.
Bloomberg contributed to this report