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European finance ministers have expressed their relief at a likely delay to car tariffs by the President Donald Trump administration, and warn that any new levies would weigh on global growth.
The White House has until midnight Friday (Washington time) to decide whether to impose tariffs on European cars and car parts. However, four sources told CNBC earlier this week that the U.S. administration will delay the decision by six months.
"That's a wise decision," French Finance Minister Bruno Le Maire told CNBC Thursday in Brussels. "I think we should avoid any kind of sanctions, tariffs and trade war because, you know, the deep conviction of the French government is entering any kind of trade war will have a very negative effect on global growth, growth for the U.S., growth for China, and of course for all European countries," he added.
Imposing duties on European car imports would likely hurt Germany the most, given that it is one of the largest direct car exporters to the U.S.
This economic threat is an acute concern for European leaders at a time when the euro zone is already showing signs of weakness. Recent manufacturing and growth data have led the European Central Bank (ECB) to cut its growth projections for the year. Growth in the region — and especially Germany — is sensitive to external shocks due to its export-driven economy.
For a strong world economy it's important that "we increase trade and not increase new barriers," Olaf Scholz, the German finance minister told CNBC Thursday.
"It is a very good message," he added, regarding the reports of the postponement.
Trump threatened to impose 20% tariffs on European cars back in 2018, arguing there's a trade imbalance threatening the U.S.'s national security. Since then, the EU has made every effort to ensure the tariffs are avoided. European Commission President Jean-Claude Juncker traveled to the U.S. last year and agreed with Trump to work together to bring existing tariffs toward zero on non-auto industrial goods; to buy more liquefied natural gas from the U.S. and to find ways to bring their standards closer together.
However, both sides have not yet started discussing a trade deal. "Each day when we don't have a trade war between Europe and the United States is a good day," Kristian Jensen, the Danish finance minister, told CNBC in Brussels. "And the longer the postponement, the more we can work to get (the trade war) off the table," he added.