November 11, 2019 / 10:11 PM / 25 days ago

Trump expected to delay European auto tariff decision: EU officials

WASHINGTON (Reuters) - U.S. President Donald Trump is expected to announce this week he is delaying a decision on whether to slap tariffs on cars and auto parts imported from the European Union, likely for another six months, EU officials said.

FILE PHOTO: U.S. and European Union flags are pictured during the visit of Vice President Mike Pence to the European Commission headquarters in Brussels, Belgium February 20, 2017. REUTERS/Francois Lenoir/File Photo

“We have a solid indication from the administration that there will not be tariffs on us this week,” one EU official said on Monday.

The Trump administration has a Thursday deadline to decide whether to impose threatened “Section 232” national security tariffs of as much as 25% on imported vehicles and parts under a Cold War-era trade law.

U.S. Commerce Secretary Wilbur Ross, whose agency is overseeing an investigation into the effect of auto imports on U.S. national security, said on Nov. 3 the United States may not need such tariffs after holding “good conversations” with automakers in the European Union, Japan and South Korea.

Trump last May delayed a decision on the tariffs by six months, and another delay would cause automakers across the globe to breathe a sigh of relief.

The president could bring up the issue of car tariffs in a speech he is delivering on Tuesday at the Economic Club of New York. A White House spokesman would only say Trump would focus his speech on how his tax and trade policies have supported a strong economic recovery.

EU officials said while a further six-month delay was likely, Trump’s actions were unpredictable and he would likely keep the threat of car tariffs hanging over them as the United States and European Union pursue trade negotiations in the coming year.

“We believe that nothing will happen for now, but the threat of tariffs will be left there as leverage,” said a European diplomat.

U.S. Trade Representative Robert Lighthizer and EU Trade Commission Cecilia Malmstrom have spoken more often in recent weeks, and the tone had become more “positive,” the diplomat added.

Politico earlier reported on Monday that Trump would announce a six-month delay in the EU car tariff decision, citing a unnamed person familiar with the decision.

The European diplomat said there was no specific timetable for an in-person meeting between Lighthizer and Malmstrom or any concrete sign the United States and Europe were nearing an agreement on trade issues.

The United States wants to include increased U.S. agricultural access to Europe in the talks. But EU member states have resisted that, only authorizing negotiations over industrial goods tariffs and regulatory issues.

When the United States and Japan reached a partial trade deal in September involving agriculture and industrial goods, Japanese Prime Minister Shinzo Abe said he won a firm commitment from Trump not to impose national security tariffs on Japanese autos.

A South Korean auto industry source also expected Trump to delay the decision on the Section 232 tariffs, and use it as leverage during ongoing negotiations with EU.

South Korea has been less worried about tariffs on its U.S. automotive exports, given it has already signed a trade agreement with the United States that included some auto concessions.

Trump has complained loudly about the U.S. goods trade deficits of $68 billion with Germany and $67 billion with Japan in 2018, most of which come from the autos sector.

Reporting by David Lawder and Andrea Shalal; Additional reporting by Tim Ahmann and Mohammad Zargham in Washington, and Hyunjoo Jin in Seoul, Editing by Chris Reese, Peter Cooney and Lincoln Feast.

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