July 10, 2019 / 2:40 PM / 11 days ago

Europe should brace for U.S. tariffs on several fronts: German official

WASHINGTON (Reuters) - European Union member states should brace for U.S. tariffs on several fronts in the months ahead, a senior German official warned late on Tuesday, just hours before Washington launched a probe of a planned French digital tax that could trigger future tariffs.

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

Peter Beyer, Germany’s transatlantic coordinator and member of parliament, said while there was continued U.S. interest in dialogue with Europe, the Trump administration nonetheless appeared poised to impose tariffs over disputes about aircraft subsidies, the Nordstream 2 gas pipeline and European car imports.

U.S. President Donald Trump in May said some imported vehicles and parts posed a national security threhere, but postponed a decision on imposing tariffs on European and Japanese auto imports for as long as six months to allow time for trade talks with both partners.

European officials have said privately that they fear that Trump will now turn his attention to Europe, after brokering a truce in a protracted trade battle with China.

Trump on Wednesday ordered a investigation to determine whether France’s planned 3% tax on the French revenue of large internet companies was unfairly targeting certain U.S.-based companies. Prior investigations focused on China’s trade practices and EU subsidies on large commercial aircraft.

“These are difficult discussions in a difficult international environment,” Germany Economy Minister Peter Altmaier said after a meeting with U.S. Treasury Secretary Steven Mnuchin in Washington.

He said the exchange with Mnuchin was “productive and constructive,” focusing on reducing global tensions, easing trade disputes and keeping jobs in both countries.

Altmaier is due to meet with U.S. Trade Representative (USTR) Robert Lighthizer and Commerce Secretary Wilbur Ross on Thursday.

Later on Wednesday, the minister told an event hosted by German Marshall Fund that Washington and Brussels could reach a trade deal on industrial products by year-end if there exists the sufficient political will to get it done.

“We have to act now. There is no time to be wasted,” Altmaier said. “If there is a political will, we could come to a solution before the end of the year.”

He also said Europe and the United States could be far more effective in leveling the playing field with China if they resolved their differences and worked together to “streamline and coordinate our respective efforts a little more.”

Beyer, who met with officials from the USTR’S office and the White House, as well as U.S. lawmakers, said the auto tariffs were likely in mid-November, given growing impatience in Washington with the EU and the bloc’s refusal to include agriculture in broader trade talks.

“When it comes to the car tariffs, I unfortunately think they are more likely than not to be imposed in mid-November. There is quite a lot of impatience on the U.S. side. But that also requires us on the European side to be strong and unified.”

Beyer said the U.S. government appeared interested in resolving disputes between the United States and the EU before the World Trade Organization (WTO) over aircraft subsidies, but was unlikely to refrain from imposing tariffs in the interim.

“The WTO arbitrator decision is expected soon, as early as next week. I fully expect the Trump administration to impose tariffs. The U.S. side feels entitled to impose the tariffs and I believe they will, in any case,” he said.

The WTO has found that both U.S.-based Boeing here (BA.N) and Europe's Airbus (AIR.PA), the world's two largest planemakers, have received billions of dollars of harmful or illegal government subsidies here to gain advantage in the global market.

The United States and EU have each threatened to impose billions of dollars of tit-for-tat tariffs, with Washington first in line to seek tariffs under the WTO timetable.

The WTO arbitrator is due to decide how much of the $11.2 billion in tariffs proposed by Washington can be applied.

Altmaier said he would discuss efforts to settle the dispute with Lighthizer on Thursday, adding: “In our view it is in the interest of both sides to avoid these tit-for-tit tariffs.”

The EU this month said it was open to talks with Washington in the dispute, but no formal talks have begun, according to sources familiar with the issue.

Beyer said he told U.S. officials that he did not view imposing tariffs ahead of any such settlement talks “as a great way to build confidence in that process.”

European companies could also face sanctions as early as August or September over U.S. objections about Russia's Nord Stream 2 natural gas pipeline project here, Beyer said.

The 760-mile (1,225-km) pipeline project to ship gas from Russia under the Baltic Sea to Germany has drawn U.S. objections on security grounds and divided the European Union.

Slideshow (2 Images)

Nord Stream 2 is led by Russian state gas producer Gazprom (GAZP.MM), with 50% of the funding provided by Germany’s Uniper (UN01.DE) and BASF’s (BASFn.DE) Wintershall unit, Anglo-Dutch firm Shell (RDSa.L), Austria’s OMV (OMVV.VI) and France’s Engie (ENGIE.PA).

U.S. Energy Secretary Rick Perry in May said a sanctions bill here putting onerous restrictions on companies involved in the project would come in the "not too distant future."

Washington fears the pipeline will ultimately increase the European Union’s reliance on Russian gas.

Additional reporting by David Shepardson in Washington; editing by Bernadette Baum, James Dalgleish and G Crosse

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