EU to supply decrease tariffs on US vehicles

Unlock the White House Watch newsletter for free

The EU will offer to cut tariffs on US car imports as part of a deal to avoid a trade war with Donald Trump, according to a senior lawmaker.

Bernd Lange, who heads the European parliament’s trade committee, told the Financial Times the bloc was willing to lower its 10 per cent import tax closer to the 2.5 per cent charged by the US.

“We can try to have a deal before escalating costs and tariffs,” said Lange, who is familiar with discussions within the EU on how to de-escalate tensions with the White House.

The bloc would offer to buy more liquefied natural gas and military equipment from the US, “plus also look to lower tariffs for cars”, he added.

The EU hopes to avoid a damaging trade war by finding ways to cut its trade surplus with the US, which Trump has frequently cited as a reason for punitive measures. In Trump’s first term Brussels lowered the bloc’s tariffs on lobsters and offered to buy more LNG and soyabeans, which limited a trade dispute to steel and aluminium.

The EU car industry is supportive of the move, officials in Brussels told the FT. The sector fears that Trump will make good on his threat to impose tariffs after complaining that Europeans “don’t buy our cars, they don’t take our farm products, they take almost nothing and we take everything from them”.

The reduced car tariffs — a decision taken by the European Commission as the bloc’s representative on trade policy — would also apply to China and other countries under WTO rules.

“We have bound tariffs for cars at the WTO at 10 per cent, but let’s say, to show the world we have fair relations, it might be possible to reduce them”, said Lange.

EU officials are confident that imports from China would not surge, given that the bloc has already imposed tariffs of up to 35 per cent on the country’s electric vehicles on the grounds that they are unfairly subsidised by Beijing.

BMW chief executive Oliver Zipse has called for lower tariffs on cars and Mercedes boss Ola Källenius said he wants a “grand bargain” with Trump.

EU officials said key car making countries, including Germany, have been consulted and Berlin is not expected to oppose the move.

In 2022 the EU exported 738,436 vehicles to the US, valued at €37.4bn. It imported just 271,476 from the US, worth €8.7bn.

Lange warned that if talks failed the EU would hit back with a new weapon allowing it to target US tech and financial companies. The anti-coercion instrument was created after Trump’s first term, to deal with countries using economic pressure to change domestic policy.

“Sometimes it’s important to have a gun on the table,” said Lange.

The FT reported this week that European Commission was preparing to use the measure for the first time.

Lange said Trump would likely use tariffs to try to force the EU to loosen regulations and remove taxes on online companies such as Meta, X and Google.

“Therefore the ACI comes into play so that we can use this instrument also to tackle these big tech companies.”

He said Brussels could suspend intellectual property rights, for example allowing free use of software, and apply duties to streaming services and other digital platforms.

Recommended

He said the ACI would require around six months to deploy, as the EU would have to calculate the damage to its industries and get majority member state support.

But he said governments had noted how the fast retaliation by Canada and Mexico to the 25 per cent tariffs levied on them had prompted Trump to suspend them for 30 days.

“We are, of course, more powerful than Canada or Mexico is. And therefore, I guess that we are able to defend our economic interests.”

The Commission declined to comment.

Source link