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EU trade boss says Brussels is ready to scrap car tariffs if US does the same

Key Points
  • European Union Trade Commissioner Cecilia Malmstrom told EU lawmakers on Thursday what was discussed between Donald Trump and Jean-Claude Juncker at a July meeting.
  • In a subsequent Q&A, Malmstrom suggested that the EU would entertain zero tariffs on exports of autos.
  • Shares of autos initially spike on the comments but then give up session gains.
US President Donald Trump (L) talks to European Commission President Jean-Claude Juncker ahead of a working session the G20 leaders summit in Hamburg. 
Mikhail Metzel | TASS | Getty Image

Auto stocks in Europe spiked on Thursday after the European Union's top trade spokesperson claimed Brussels was willing to scrap tariffs on all industrial products, including cars.

"We are willing to bring down even our car tariffs to zero, all tariffs to zero, if the U.S. does the same," Trade Commissioner Cecilia Malmstrom told European Parliament lawmakers.

Malmstrom's claim goes further than an agreement in July between President Donald Trump and European Commission President Jean-Claude Juncker that said the two sides would work to eliminate tariffs on non-auto industrial goods.

European automotive stocks initially jumped on the news but by 3:30 p.m. London time (10:30 a.m. ET), the sector had given up all of its earlier gains.

Earlier in her presentation, Malmstrom had revealed details of the conversation between the U.S. and EU delegations on July 25.

"We said that we are ready from the EU side to go to zero tariffs on all industrial goods, of course if the U.S. does the same, so it would be on a reciprocal basis," Malmstrom told the European Parliament's trade committee.

At present, America imposes a 25 percent duty on light trucks and pickups and 2.5 percent on smaller autos. The EU imposes a flat 10 percent tariff.

Auto stocks in Europe have struggled in 2018 as investors feared Trump would follow through on a June tweet that stipulated that if the EU does not remove duties on U.S. cars, then the U.S. will have no choice but to impose a 20 percent tariff of its own.

VIDEO1:5501:55
Trump threatens 20-percent tariff on European cars

Following that threat, shares of BMW, Volkswagen, Fiat Chrysler and Mercedes-maker Daimler all moved lower. Ford and General Motors shares also slipped following the news.

CNBC asked the European Commission to clarify Malmstrom's comments, but at the time of publication had received no reply.