Merkel will back cutting EU car tariffs

US envoy to Germany hold talks with car bosses

BERLIN, July 5, (Agencies): German Chancellor Angela Merkel said on Thursday she would back lowering European Union tariffs on US car imports, responding to an offer from Washington to abandon threatened levies on European cars in return for concessions.

“When we want to negotiate tariffs, on cars for example, we need a common European position and we are still working on it,” Merkel said.

US President Donald Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.

According to an industry source, the US ambassador to Germany told German car bosses from BMW, Daimler and Volkswagen at a meeting on Wednesday that Trump could abandon such threats if the EU scrapped duties on US cars imported into the bloc.

Merkel said any move to cut tariffs on US vehicles would require reductions on those imported from other countries to conform with World Trade Organization rules.

“I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the US,” she said.

German automotive trade body VDA said any suggestions about mutually removing tariffs and other trade barriers were positive signals.

“But it is clear that the negotiations are exclusively being held at a political level,” it said in a statement.

Current US import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States.

Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminium at the start of June, ending exemptions that had been in place since March.

The EU executive responded by imposing its own import duties of 25 percent on a range of US goods, including steel and aluminium products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.

Trump’s protectionist trade policies, which also target Chinese imports, have raised fears of a fullblown and protracted trade war that threatens to damage the world economy.

But Merkel said that any negotiations on lowering tariffs in one area could only be conducted with “all the countries with which we have trade in cars,” rather than just with the United States.

A deal with the US alone “would not conform with WTO” rules, she said.

“We can either have negotiations about a wide range of tariffs, for 90 percent of goods,” Merkel said in a reference to the stalled talks for a transatlantic free-trade deal known as TTIP.

“Or we can talk about one type of goods, but then we must accord the same treatment to all trading partners of the world. That’s an option I could imagine,” she added.

Merkel’s offer came after US ambassador in Berlin, Richard Grenell, hosted bosses of Germany’s biggest car firms for talks on Wednesday when he called on the EU to bring tariffs to zero on car imports -- in exchange for equal treatment by the US.