According to the Financial Times, a senior European Parliament member revealed that the EU will propose to cut tariffs on U.S. imported cars as part of a deal to avoid a trade war with U.S. President Donald Trump.
European Parliament Trade Commission Chairman Bernd Lange told the Financial Times that the EU is willing to reduce its current 10% car import tax to nearly 2.5% of the United States.
“We can try to reach a deal before costs rise and tariff escalation,” Bernd Lange said, familiar with discussions within the EU on how to ease tensions with the White House.
He added that the EU will propose to buy more LNG and military equipment from the United States, “and consider reducing vehicle tariffs at the same time.”
The EU hopes to avoid a destructive trade war by reducing its trade surplus with the United States, which Trump often uses as a reason to impose punitive measures on the EU. During Trump’s first term, the EU lowered tariffs on U.S. lobsters and proposed buying more liquefied natural gas and soybeans from the United States, limiting trade disputes only to steel and aluminum.
EU officials revealed to the Financial Times that the EU’s auto industry supports the move. The European auto industry is worried that Trump will fulfill its threat and impose tariffs on European cars. Trump once complained that Europeans “don’t buy our cars, our agricultural products, they buy almost nothing, and we buy everything from them.” In 2022, the EU exported 738,436 cars to the United States, worth 37.4 billion euros, while only 271,476 cars imported from the United States, worth 8.7 billion euros.
It is worth noting that according to World Trade Organization (WTO) rules, the EU’s decision to lower automobile tariffs will also apply to China and other countries.
“We set the tariffs on automobiles at 10% under the WTO framework, but it can be said that in order to show the world that we have fair trade relations, it is possible to lower tariffs.”
EU officials believe that even with lowered tariffs on automobile imports, automobile imports from China are not expected to surge, as the EU has imposed tariffs of up to 35% on the grounds that China’s electric vehicles have received unfair subsidies.
BMW CEO Oliver Zipse called for lowering car tariffs, and Mercedes-Benz chief Ola Källenius also expressed hope to reach a “major agreement” with Trump. EU officials said they had consulted with major automakers, including Germany, and Germany was not expected to object to the move.
Lange warned that if negotiations fail, the EU will enable new means to fight back, such as imposing higher taxes on U.S. technology and financial companies and suspending intellectual property protection. He also said the launch of the anti-coercive tool would take about six months as the EU had to calculate the damage to its industry and gain support from most member states.
But he said governments have noticed a swift fight back against Trump’s 25% tariff imposed by Canada and Mexico, prompting Trump to postpone the tariffs’ effective date by 30 days. “Of course, we’re stronger than Canada or Mexico. So I think we can defend our economic interests.”
The European Commission declined to comment on the above reports.