The U.S. threatened high tariffs on imported cars from the European Union earlier this year.
U.S. Ambassador to Germany Richard Grenell told executives from Daimler Group, Volkswagen, Volkswagen and BMW that President Donald Trump would suspend tariff threats against the EU in exchange for trade concessions, according to a recent Reuters report. German media outlet Handelsblatt reported that Trump wanted the EU to annul duties on U.S. cars imported to the bloc. In exchange, the U.S. would not enact a proposed 20-percent tariff against cars assembled in the EU and shipped overseas.
Presently, the European Union imposes a 10-percent duty on cars imported from the U.S. On the other hand, the U.S. levies a smaller duty on European cars, at 2.5 percent. However, should the 20-percent tariff go into effect, automakers and industry analysts alike believe it would likely upset the current industry model for producing and selling European cars for the American market. To that end, German Chancellor Angela Merkel would also back lowering EU automotive tariffs against the U.S., according to a separate report in Reuters. However, Merkel also stated that the bloc would have to decide as a whole, rather than Germany agreeing to lower tariffs on a unilateral basis. “When we want to negotiate tariffs, on cars for example, we need a common European position and we are still working on it.”
A positive signal moving forward
Nevertheless, support on both the U.S. and EU sides to reduce or withdraw tariffs sent positive signals. U.S. stocks opened higher on Thursday at the hint of concessions on EU automotive tariffs. At this point, neither side has officially agreed to end the current tariffs or new ones. This also does not seem to affect the United States’ current EU tariffs on aluminum and steel. Steel imported from the 28-nation bloc is taxed at 25 percent, while aluminum imports are taxed at 10 percent. Those tariffs also apply to steel and aluminum imported from Canada and Mexico.
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