Trump vs. EU: Next round features face-to-face visit

BRUSSELS» One of the European Union’s main leaders will sit down with U.S. President Donald Trump on Wednesday, hoping to convince him to hold off from raising tariffs on imported cars and avoid a trans-Atlantic trade war.

The visit to the White House by European Commission President Jean-Claude Juncker comes on the heels of an especially ill-tempered continental tour by Trump, in which he called the EU — a 28-country bloc including many historic U.S. allies — his “foe.” Trump especially came down hard on Chancellor Angela Merkel and Germany, the EU’s economic powerhouse.

Trump has already imposed tariffs on steel and aluminum imports from Europe, and the EU has responded in kind. But even that exchange of measures would pale in comparison with duties on cars — a huge industry that has long been the symbol of postwar wealth on both sides of the Atlantic, and especially in Germany.

Trump badly wants to reduce the U.S. trade deficit with the EU and is accusing the bloc of not playing fair on trade. And when it comes to security, he says the Europeans are refusing to pay their share in NATO and instead live off the massive U.S. defense budget.

As Juncker was flying over, Trump set the tone with a tweet:

“Tariffs are the greatest!” he wrote. “Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that.”

Germany has become increasingly fed up with such outbursts. Germany’s foreign minister, Heiko Maas, told ARD television just hours before Trump’s tweet that “We won’t let ourselves be threatened and just cave in because, if we do that once, I fear that we will have to deal with such behavior very often in the future.”

When Juncker, the doyen of compromise and consensus politics in the EU, walks into Trump’s office, the hope is that the mood will be different.

“This is an occasion to de-dramatize any potential tensions around trade and to engage in an open, constructive dialogue,” said Juncker’s spokesman, Margaritis Schinas.

The stakes are high, as the car industry carries huge heft in terms of trade and jobs in both the EU and U.S.

The European car federation says the United States is the No. 1 destination for EU-built cars, amounting to almost 30 percent of the total EU export value.

It accounts for a quarter of U.S. car imports.

If Trump imposes a 25 percent tariff on imports of cars, trucks and auto parts, it “risks dragging us all down to a game of tit for tat retaliations that ultimately leave consumers in the U.S. as well as in Europe worse off,” said professor Alexander Mattelaer of the Egmont Institute think tank.

The EU has already told its U.S. counterparts it is preparing a list of countermeasures if the car tariffs are imposed. EU passenger car exports to the U.S. amount to $44 billion a year, dwarfing the tariff tiff on steel and aluminum, which resulted in EU countermeasures of $3.2 billion.

Not only is the EU firmly against the tariffs, but so is the U.S. car industry and many voices in Congress. Automakers, suppliers and dealers argue that the tariffs would drive up car prices for U.S. consumers and hurt auto companies by increasing the cost of imported components and invite retaliation from U.S. trading partners.

On top of that, the EU also has a huge stake in the U.S. industry, where European companies produce almost 3 million cars a year, accounting for more than a quarter of production in the United States. The biggest exporter of U.S.-made cars is a German company — BMW, through its plant in Spartanburg, S.C.

German producers and supplies employ more than 118,000 people at about 300 plants, and manufacture more than 800,000 vehicles per year in the U.S. — with more than half the cars being exported, said the German Association of the Automotive Industry.

Tariffs on the industry could change all that.

“Open markets are of decisive significance for our involvement in the U.S,” said the German federation’s president, Bernard Mattes.

Usually, such economic considerations alone would push the sides to reach a compromise. But that’s not necessarily the case now.

Juncker is not bringing any blockbuster offers to Washington, according to a senior European official who briefed reporters on condition of anonymity.

Instead, Juncker intends to get a better understanding of what the Trump administration really wants. He will also discuss the possibility of trade talks between major auto-exporting countries and of an EU-U.S. freetrade agreement that would reduce trade barriers on industrial products, including autos.

Whatever compromise they are looking for, “the Trump administration doesn’t want mutual concessions,” said Edward Alden, a senior fellow at the Council on Foreign Relations.