Davos WEF

The US could still put tariffs on EU carmakers despite new trade talks, Wilbur Ross says

Key Points
  • U.S. President Donald Trump has threatened to impose levies as high as 25% on one of Europe's most important sectors – cars and automobile parts.
  • Such threat, despite recent positive statements from both sides of the Atlantic, is still on the table.
  • Ross explained that Trump decided that as long as negotiations are beginning to bear fruit he will continue to negotiate. "He has not ruled out putting tariffs if the negotiations fail," Ross said.
United States Secretary of Commerce Wilbur Ross attends during the World Economic Forum in Davos, Switzerland, on January 22, 2020.
FABRICE COFFRINI

DAVOS, Switzerland – The United States could still apply tariffs on European carmakers, despite their aim to put together a new trade deal, the U.S. Commerce Secretary told reporters in Davos Thursday.

The U.S. and the EU have been at odds over trade for about four years, since President Donald Trump was elected and ended negotiations for a transatlantic deal. Trump has said that Europe is "possibly just as bad as China" when it comes to trade and called it a "brutal" trading partner.

Trump has threatened to impose levies as high as 25% on one of Europe's most important sectors – cars and automobile parts. Such a threat, despite recent positive statements from both sides of the Atlantic, is still on the table.

"We are eager to make a peaceful resolution with the EU," Commerce Secretary Wilbur Ross said at a press conference. "But the president, as you heard yesterday, also made it very clear that if that doesn't work, he would go a different direction," Ross said.

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Ross explained that Trump decided that as long as negotiations are beginning to bear fruit he will continue to negotiate.

"He has not ruled out putting tariffs if the negotiations fail," Ross said.

Trump met the European Commission President Ursula von der Leyen at the World Economic Forum (WEF) earlier this week. Speaking to CNBC on Wednesday, Trump said they had a "great talk."

The United States wants to conclude a new trade deal with Europe before the U.S. election, later this year, Trump also said during his visit to WEF.

When asked if the timeline was perhaps too challenging, Treasury Secretary Steven Mnuchin said: "We don't set arbitrary dates on these issues. The president thinks we should move forward quickly."

However, a U.S.-EU trade deal might prove difficult to negotiate. The EU has said until now that it does not want to include agricultural goods in the agreement – something that President Trump is keen to talk.

"They barely take our agricultural products, and yet they can sell Mercedes Benz and they can sell anything they want in our country including their farm products, and it's not fair," Trump said last year.

The US wants a deal with the UK too

The Trump administration is also aiming to conclude a trade deal with the U.K. this year.

"It is an absolute priority of President Trump and we expect to conclude that with them within this year. It will be great for them and great for us," Mnuchin told reporters about concluding a trade deal with the U.K.

Ross also told reporters that it should be much easier for the U.S. to reach a deal with the U.K. than with the EU.

"Our economies are much more similar," he said. "It should be much easier mechanically."

During the U.K. election in December, Prime Minister Boris Johnson was accused by opposition lawmakers of discussing a trade deal with the U.S. that will increase healthcare costs across the U.K.

"We think drugs should have similar prices wherever they are," Ross told reporters when asked about the issue. However, he added that "the U.S. is not in any position to tell the U.K. what to pay for drugs."

A potential U.K.-U.S. trade deal can only be officially discussed once the former exits the EU later this month. The same deal can only take effect at the start of 2021 at the earliest.

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