President Donald Trump has several times raised the possibility of imposing tariffs on automotive imports from the EU, and has mentioned that any such tariffs could reach as high as 25 percent.
On Thursday, Trump said the U.S. will impose tariffs on the EU if the two sides don’t reach a trade deal, noting that the governments remain in negotiations.
O’Sullivan said the EU has neither sought nor received assurances from the Trump administration that the EU is spared from any remedy recommendations in the Commerce report.
“Our understanding is that as long as these talks are moving forward and considered productive, there will be no new tariffs, so we don’t need to ask the question,” he said.
EU Trade Commissioner Cecilia Malmstrom is expected to visit Washington in about two weeks to continue technical trade discussions, O’Sullivan said.
Commerce’s Section 232 report on automotive imports could provide a legal basis for imposing tariffs or other trade remedies if it includes findings that automotive imports threaten U.S. national security, akin to the results of Section 232 investigations into steel and aluminum imports.
Commerce has recommended up to 25 percent tariffs on automotive imports, with a particular focus on automotive parts, a source with knowledge of the report’s recommendations told American Shipper.
The source said the report provides a scalable range of options for addressing automotive imports.
Any U.S. tariffs on EU automotive imports would result in the termination of ongoing bilateral talks toward a free trade agreement, O’Sullivan said.
Agriculture Secretary Sonny Perdue last week suggested potential Section 232 tariffs on automotive imports could be used as leverage against the EU to include agriculture in trade agreement talks, according to an article by Progressive Farmer, reporting on Perdue’s remarks Thursday at the Agriculture Department’s Agricultural Outlook Forum.
The EU has thus far dismissed the idea of including agriculture in trade talks.
“The president is prepared to use whatever leverage he may have,” Perdue reportedly said.
O’Sullivan added that omitting agriculture from a bilateral free trade agreement will allow talks to progress more quickly.
He noted that the scope covers non-automotive industrial goods. Agreed to by Trump and Juncker in July, the scope should help prevent talks from drawing out too long, such as U.S.-EU Transatlantic Trade and Investment Partnership talks, O’Sullivan said, which included agriculture and several other areas. Started in 2013, negotiations lasted 15 rounds, and ended in 2016 with no agreement reached.