US President Donald Trump said that the US and the EU should drop all tariffs, barriers and subsidies, just hours before the bloc’s trade chiefs present him with proposals going a long way toward that outcome in a crunch meeting at the White House.
“I have an idea for them. Both the US and the EU drop all Tariffs, Barriers and Subsidies!” Trump said in a tweet on Tuesday night. “That would finally be called Free Market and Fair Trade! Hope they do it, we are ready — but they won’t!”
European Commission President Jean-Claude Juncker and EU Commissioner for Trade Cecilia Malmstrom were yesterday due to meet with Trump in Washington.
They planned to signal the bloc’s willingness to negotiate a bilateral trade agreement on manufactured goods, or a so-called “plurilateral sectoral agreement” between all major car exporters, which would cut or eliminate tariffs on automobiles globally.
The overtures are a last-ditch attempt to dissuade him from imposing tariffs on European car exports to the US, in what could deal a serious blow to the EU’s economy.
“We are here to explain and find out how to prevent a trade war,” Juncker said in an interview with German broadcaster ZDF before the meeting, adding that he was not overly optimistic.
The EU is prepared to retaliate “immediately” if talks fail, he added.
The commission, which manages trade relations on behalf of all 28 nations in the EU, is preparing a list of retaliatory measures on US goods worth US$20 billion should the US impose car tariffs, Malmstrom said.
“It would be more general, like farming goods, machines, high-technology products and others,” she said in an interview with Swedish newspaper Dagens Nyheter.
Highlighting the complexity of yesterday’s talks, hours before Trump called for the elimination of all tariffs, he had tweeted that “tariffs are the greatest.”
He has also singled out the EU as a “foe” of the US because of its trade surplus, and hinted that the US’ commitment to the continent’s security is contingent on resolving the spat over tariffs.
The euro and shares in European auto exporters could drop if the Washington talks result in “further escalation of the US-EU trade tensions, with President Trump sticking to his threat of additional tariffs on EU car exports and EC President Junker threatening to retaliate,” Credit Agricole analysts led by Valentin Marinov said in a note.
Analysts say that worse might be coming.
Trump’s announcement of plans to provide US$12 billion in aid for US farmers suffering from tariffs suggest that “Trump is preparing for the long haul,” ING Bank analysts Martin van Vliet and Benjamin Schroeder said.
“With Trump having called the EU a ‘foe’ recently and his assertion that he was ‘playing with the bank’s money,’ any quick resolution in this high-stakes stand-off would come as a surprise,” they said.
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