Backing off auto tariffs, US and EU agree to more talks

Randal Sanchez
July 30, 2018

"It's encouraging that they're talking about freer trade rather than trade barriers and an escalating tariff war", said Rufus Yerxa, president of the National Foreign Trade Council and a former USA trade official. Juncker, after Trump imposed tariffs on steel and aluminum imports, said in March that "this is basically a stupid process, the fact that we have to do this".

However, market watchers said that Europe has already been a heavy buyer of USA soybeans since prices plunged in June as China has largely stopped buying them in retaliation for trade measures that Trump has targeted at Beijing.

The main question mark is the feasibility for the European Union of the remaining part of the package: a goal to import more liquefied-natural gas from the U.S. This has strategic consequences for the bloc in general and for Germany in particular as Europe seeks to reduce reliance on Russian natural gas.

But he said reaching a detailed trade agreement with the European Union would probably prove hard.

A report from UBS warned that 25% tariffs on global vehicle and auto part imports would increase costs for automakers by as much as 18%.

European Union Commission President Jean-Claude Juncker (zhahn-KLOHD' YUN'-kur) is telling President Donald Trump that the E.U. and U.S. are partners and allies, "not enemies", and must work together at the start of trade negotiations between the two major economies.

Whatever progress was achieved Wednesday could provide some relief for USA automakers.

Price of US soybeans 2018 updated July 22
Price of US soybeans 2018 updated July 22 Jenny Cheng Business Insider

And they would continue to hit United States trading partners such as Canada, Mexico and Japan even if the U.S. and the European Union cut a deal. The EU has counterpunched with tariffs on USA products.

Juncker told Trump during a meeting in the Oval Office that the trade talks are important. The reverberations would be enormous: The EU accounted for just 22 percent of USA auto imports previous year; Canada and Mexico combined for 47 percent.

"If the West is not nipping at each other, they can turn toward China", said Timothy Keeler, a lawyer and former chief of staff for the U.S. Trade Representative.

"If we hadn't had steel and aluminum tariffs, we never would have gotten to the point we are now", Commerce Secretary Wilbur Ross told reporters. The company said it now sees fewer SUV sales and higher costs at its Mercedes-Benz Cars division than previously expected as a result of the tariffs, and "this effect can not be fully compensated by the reallocation of vehicles to other markets". General Motors slashed its outlook, and shares of Ford Motor Co. and auto parts companies have fallen. Rabobank International Ltd. predicted in June that the USA may overtake Brazil as the biggest soybean exporter to the EU. That's because China, by far the largest market for the crop, has imposed retaliatory tariffs on USA soybeans, causing sales to shrink.

The affected countries have in turn targeted US agricultural products, including soybeans, dairy, meat, produce and liquor. "The proposed solutions move in the right direction but a significant proportion of skepticism remains", the DIHK said. "And the European Union is going to start, nearly immediately, to buy a lot of soybeans", Trump told reporters after the meeting.

Mnuchin said there were no new developments on the dispute with China, which has been the target of most of Trump's trade policies. Trump had threatened to tax imported cars, trucks and auto parts, potentially targeting imports that a year ago totaled $335 billion.

German Economy Minister Peter Altmaier, a conservative, hailed the talks as a "breakthrough" that could avoid a trade war and save millions of jobs. Daniel Ikenson, director of trade studies at the libertarian Cato Institute, warned that the fight could flare up again if Trump grows impatient with Europe.

British voters support a referendum on final Brexit deal: YouGov - International
France's European affairs minister Nathalie Loiseau warned that Britain would suffer more than the EU if no deal was reached. Insisting there was no sidelining, Raab said later there was no tension and that he will attend all meetings with May.

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