There may not be a trade war over automakers after all.
Just a few weeks after President Donald Trump launched a Commerce Department review of how auto imports might be hurting national security, Germany’s biggest automakers are ready to give up on the ten percent protective tariff wall that has shielded them from competition with U.S. cars, according to the Wall Street Journal. (WSJ)
Their proposal envisions full reciprocity between the U.S. and the European Union, according to the WSJ. The E.U. would scrap its ten percent tariff while the U.S. would give up its 2.5 percent tariff.
President Trump has repeatedly said that “reciprocity” should be a guiding principle for international trade.
The news of the German surrender on tariffs is a diplomatic coup for U.S. Ambassador to Germany Richard Grenell, who returns to Washington this week, the WSJ states.
According to the outlet:
Over the past few weeks, Mr. Grenell has held closed-door meetings with the chiefs of all major German automotive companies, including bilateral meetings with the CEOs of Daimler AG, BMW AG and Volkswagen AG, which operate plants in the U.S.
During these talks, which the ambassador initiated, the managers said they would back the scrapping of all import tariffs on trans-Atlantic trade in automotive products as the keystone of a broader deal covering industrial goods. The German government is on board and Mr. Grenell promised to support the idea, according to U.S. and German officials.
The Trump administration is praising the German approach as holding out a model to the world for how to resolve trade disputes. On Tuesday, by contrast, Peter Navarro, White House Trade adviser, said that despite several rounds of negotiations, the U.S. had made “no progress” in getting China to give up its predatory trade practices.
“Germany has the right approach to resolving this trade disagreement among friends,” said U.S. Commerce Secretary Wilbur Ross, the Wall Street Journal reports.
One possible stumbling block is that the Germans are asking the U.S. to scrap a 25 percent U.S. tax on imports of light trucks, a category that includes pickup trucks, sport utility vehicles, and big vans. The Johnson administration put that tax in place after Europeans put a tariff on chickens, a major U.S. export at the time.