(Bloomberg) -- The Trump administration may punt on a decision on whether to slap tariffs on European automobiles as efforts of German automakers to highlight their new investments have helped in the talks, people familiar with the White House deliberations said.
In May, President Donald Trump gave himself a deadline of mid-November to decide whether to impose levies on cars and auto parts from the European Union. The EU threatened to retaliate with tariffs on $39 billion of American goods if the president carried out his threat.
Trump is expected to extend this week’s deadline again, according to people familiar with the plans, but the president has not yet made a final decision.
The White House declined to comment on Monday.
Commerce Secretary Wilbur Ross, in an interview with Bloomberg TV earlier this month, signaled that a postponement was likely.
“Our hope is that the negotiations we’ve been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put the 232 fully into effect, may not even be necessary to put it partly in effect,” said Ross, referring to the national-security investigation under Section 232 of a 1962 trade law.
Trump won’t impose the tariffs, European Commission President Jean-Claude Juncker told German newspaper Suddeutsche Zeitung last week. A 25% U.S. levy on foreign cars would add 10,000 euros ($11,000) to the sticker price of EU vehicles imported into the country, according to the Brussels-based European Commission, the bloc’s executive arm.
Last year, Trump infuriated European leaders by declaring American imports of steel and aluminum a security threat and imposing levies of 25% and 10%, respectively, on shipments from around the world, including the EU. That prompted the bloc to retaliate with tariffs on American goods such as Harley-Davidson Inc (NYSE:HOG) motorcycles, Levi Strauss (NYSE:LEVI) jeans and bourbon whiskey.
U.S. tariffs on European cars and auto parts would mark a significant escalation of transatlantic tensions because the value of EU automotive exports to the American market is about 10 times greater than that of the bloc’s steel and aluminum exports combined. As a result, European retaliatory duties would target a bigger amount of U.S. exports to Europe.
The Trump administration has reached separate agreements with other foreign auto-producing nations like Mexico, Canada and Japan to prevent the U.S. from imposing tariffs on their imported vehicles.
