President Trump rejected an informal proposal by the European Union’s top trade official to eliminate tariffs on imported cars in both the European Union and the United States, a rebuff that undermined a day of otherwise positive rhetoric from U.S. trading partners on both sides of the Atlantic.
In an interview with Bloomberg News, Trump suggested that eliminating car tariffs wouldn’t lead Europeans to buy more American cars. “It’s not good enough,” he said of the idea. “Their consumer habits are to buy their cars, not to buy our cars,” he said.
His remarks came hours after Cecilia Malmstrom, the European Union’s trade commissioner, said the bloc is willing to eliminate tariffs on imported cars if the United States does the same, and as Canadian officials reported a “constructive atmosphere” during talks in Washington to rework the North American Free Trade Agreement.
The European Union is willing to reduce “car tariffs to zero, all tariffs to zero, if the U.S. does the same. It has to be reciprocal,” Malmstrom said.
Trump has long complained about what he considers high European tariffs on U.S. auto imports. The European Union charges a 10 percent tariff on imported U.S. automobiles, while the United States charges a 2.5 percent tariff on European cars and a 25 percent tariff on imported pickup trucks and sport-utility vehicles.
Earlier this year, Trump threatened to heighten a trade war by increasing tariffs on auto imports from Europe.
In late July, he and European Commission President Jean-Claude Juncker announced a deal to ease U.S.-E.U. trade tensions and avoid hitting each other with further tariffs. That preliminary deal called for both sides to “work together toward zero tariffs” on non-auto industrial goods. Malmstrom’s proposal also to consider zero tariffs on auto imports went a step beyond that.
Chad Bown, an economist with the Peterson Institute for International Economics in Washington, said Trump has often “called for zero tariffs on everything.”
“But we have to see if President Trump is really interested in deals that cut tariffs. He has said it, but all we have seen so far is him raise tariffs, not lower them,” Bown said.
The European Union and the United States established a group to work out the details of their rough July agreement, and Malmstrom said it will be meeting soon in Brussels.
“This is an opportunity to work with our American partners to turn the tide,” she said. “This is something we owe to our citizens, to try to find a positive agenda forward rather than the situation we were confronting at the beginning of the summer with an almost daily escalation.”
Meanwhile, U.S. negotiations with Canada over a new NAFTA continued to receive positive reactions Thursday, although the details of any concrete change remained unclear.
Canadian Foreign Minister Chrystia Freeland emerged from talks with U.S. Trade Representative Robert E. Lighthizer to say that she was “encouraged by the constructive atmosphere” of the talks.
“Our officials did some work, they’ve prepared some issues for me and Ambassador Lighthizer to take some decisions, and we’re about to go in to continue negotiating to do precisely that,” Freeland told reporters during a break.
On Wednesday, Canadian Prime Minister Justin Trudeau lifted hopes when he told reporters that the United States, Canada and Mexico might be able to reach a deal on reworking their free trade agreement by Friday.
Trudeau cautioned that Canada was still prepared to walk away from any deal that was not in the country’s best interest.
But the continued negotiations marked a change from the past several weeks when Canadian officials were largely shut out of trade discussions because of Trump’s ongoing feud with Trudeau.
The acrimony boiled over at a Group of Seven summit in June, when Trump called the prime minister “weak” and accused him of making “false statements.”
Trudeau replied that Canada wouldn’t be “pushed around” and described as “insulting” Trump’s insistence that national security concerns were forcing him to impose tariffs on imported aluminum and steel.
The Trump administration wants to send a letter to Congress by Friday that would formally begin a 90-day process for reworking NAFTA. The precise terms of an agreement would not have to be completed until late September under that process.
On Monday, Trump announced that he had reached a preliminary trade agreement with Mexico and suggested using it as a replacement for NAFTA, essentially threatening to remove Canada from the arrangement. It’s unclear whether such a move would be permissible under U.S. law, but Canada rushed to the negotiating table.
Trump also threatened to impose auto tariffs on Canada if it doesn’t sign on to a new NAFTA deal.
A senior Canadian official said that Congress’s timeline “doesn’t have anything to do with” Canada’s ratification process, and that any letter of progress sent on Friday would be strictly for U.S. purposes.
But there’s a sense of solid progress before that deadline, the official said. A conference call Thursday afternoon between Trudeau and Canada’s provincial leaders left federal negotiators “confident” that there is support across the country’s provinces, said the official, who spoke on the condition of anonymity to discuss sensitive deliberations.
The leader of Quebec, which would be hit the hardest by likely concessions on dairy, told the Montreal Gazette shortly after the call that in his view, “things are going well” in Washington.
A major sticking point appears to be a dispute resolution process often used by Canadian lumber companies to challenge U.S. duties. Canada has reportedly drawn a firm line on keeping the process, while U.S. negotiators have called for its removal.
On Thursday, a Canadian industry representative said changes could be made to the system that could make Americans slightly happier with it, without removing it entirely.
“I think if there’s opportunities to modernize the dispute resolution process, maybe make sure it’s faster or more efficient . . . I think that’s fair,” said Susan Yurkovich, chief executive of British Columbia’s Council of Forest Industries.
Ross reported from Ottawa.