Washington: US President Donald Trump and European Commission chief Jean-Claude Juncker today agreed on a plan to defuse the festering trade dispute between the two major economies.
The agreement, though short on details, means Washington will not follow through with a threat to impose tariffs on autos, which would hurt the dominant German car industry.
The pair – who met for more than two hours of talks at the White House – also said they would work to “resolve” the existing duties on steel and aluminum imposed by Washington, which had angered key allies including the European Union.
“We want to further strengthen this trade relationship to the benefit of all American and European citizens,” Trump said in a statement delivered from the White House Rose Garden.
The outcome seemed a victory for Trump, who had assured supporters that his confrontational trade strategy would bear fruit, and who appears to have conceded little in the talks with the EU.
The leaders agreed to “launch a new phase” in the relationship and “to work together towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” Trump said.
In addition, the EU has made a commitment to buy US soybeans and natural gas.
Juncker, who had been somewhat defiant ahead of the meeting, said afterward, “I had the intention to make a deal today. And we made a deal today.”
However, the deal was contingent “on the understanding that as long as we are negotiating… we will hold off further tariffs, and we will reassess existing tariffs on steel and aluminum.”
While EU officials had threatened immediate retaliation to any auto tariffs and said they would not negotiate with Washington under duress, they seem to have decided to appease the irascible US leader.
“Congrats to @JunckerEU, @realDonaldTrump: Breakthrough achieved that can avoid trade war & save millions of jobs! Great for global economy!” German Economy Minister Peter Altmaier said on Twitter after the talks.
— Peter Altmaier (@peteraltmaier) July 25, 2018
Trump also won a commitment to work together to reform the World Trade Organization to address some of his complaints about China on the theft of US technology, the behaviour of state-owned enterprises, and overcapacity in steel.
The US and EU account for about $1 trillion in trans-Atlantic trade, and tensions spiked leading up to Wednesday’s high-stakes talks.
EU Trade Commissioner Cecilia Malmstrom, who accompanied Juncker, hailed the agreement and said on Twitter that she “will be working hard to take this work forward in the coming months.” The details and mechanisms, as well as the timing, remain to be worked out, and the impact may not be seen for some time.