U.S. President Donald Trump is expected to announce this week he is delaying a decision on whether to slap tariffs on cars and auto parts imported from the European Union, likely for another six months, EU officials said.
“We have a solid indication from the administration that there will not be tariffs on us this week,” one EU official said on Monday.
The Trump administration has a Thursday deadline to decide whether to impose threatened “Section 232” national security tariffs of as much as 25 percent on imported vehicles and parts under a Cold War-era trade law.
U.S. Commerce Secretary Wilbur Ross, whose agency is overseeing an investigation into the effect of auto imports on U.S. national security, said on Nov. 3 the United States may not need such tariffs after holding “good conversations” with automakers in the European Union, Japan, and South Korea.
Trump last May delayed a decision on the tariffs by six months, and another delay would cause automakers across the globe to breathe a sigh of relief.
The president could bring up the issue of car tariffs in a speech he is delivering on Tuesday at the Economic Club of New York. A White House spokesman would only say Trump would focus his speech on how his tax and trade policies have supported a strong economic recovery.
EU officials said while a further six-month delay was likely, Trump’s actions were unpredictable and he would likely keep the threat of car tariffs hanging over them as the United States and European Union pursue trade negotiations in the coming year.
“We believe that nothing will happen for now, but the threat of tariffs will be left there as leverage,” said a European diplomat.
U.S. Trade Representative Robert Lighthizer and EU Trade Commissioner Cecilia Malmstrom have spoken more often in recent weeks, and the tone had become more “positive,” the diplomat added.
Politico earlier reported on Monday that Trump would announce a six-month delay in the EU car tariff decision, citing an unnamed person familiar with the decision.
The European diplomat said there was no specific timetable for an in-person meeting between Lighthizer and Malmstrom or any concrete sign the United States and Europe were nearing an agreement on trade issues.
The United States wants to include increased U.S. agricultural access to Europe in the talks. But EU member states have resisted that, only authorizing negotiations over industrial goods tariffs and regulatory issues.
When the United States and Japan reached a partial trade deal in September involving agriculture and industrial goods, Japanese Prime Minister Shinzo Abe said he won a firm commitment from Trump not to impose national security tariffs on Japanese autos.
A South Korean auto industry source also expected Trump to delay the decision on the Section 232 tariffs and use it as leverage during ongoing negotiations with the EU.
South Korea has been less worried about tariffs on its U.S. automotive exports, given it has already signed a trade agreement with the United States that included some auto concessions.
Trump has complained loudly about the U.S. goods trade deficits of $68 billion with Germany and $67 billion with Japan in 2018, most of which come from the autos sector.
