Angela Merkel Would Support Reduced EU Tariffs On U.S. Cars

German Chancellor Angela Merkel says she would support lowering European Union tariffs on U.S. car imports if it means President Donald Trump doesn’t slap EU-built cars imported to the U.S. with tariffs of his own.

However, Merkel cautioned that potential tariff changes are still being worked on and would need to be common across the European Union.

Last month, President Donald Trump threatened to apply a 20 per cent import tariff on vehicles built in the EU which are imported into the United States. Various automakers have criticized the move which some speculate is simply a negotiation tactic from Trump.

The U.S. ambassador to Germany, Richard Grenell, has spoken with major German auto brands, including Volkswagen, BMW, Daimler, and Continental to discuss potential tariff changes. Reuters reports that Grenell has told industry executives that Trump may abandon his threats if the EU ditches its tariffs on U.S.-built vehicles.

Interestingly, the EU won’t be able to solely reduce import tariffs on the U.S. if it wants to rectify the issue. According to World Trade Organization rules, the EU would also be required to make similar reductions on vehicles imported from other countries.

“I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the U.S.,” Merkel said.

Late last week, BMW sent a letter to U.S. Secretary of Commerce, Wilbur Ross, to say that tariffs of up to 20 per cent would hurt domestic jobs and investments. According to BMW, tariffs will make production locations outside the United States much more competitive and could lead to retaliatory measures from China and the European Union.