President Donald Trump placed more pressure on the stalled trade talks with the European Union Wednesday, threatening tariffs on European automobiles if no deal is reached.
“The European Union has been very tough on the United States for many years,” Trump told reporters on Wednesday, saying the auto tariffs were under review. “We’re looking at something to combat it.”
Trump received a report from the Commerce Department last month with the findings of an investigation into whether imports of automobiles and auto parts could qualify for tariffs as a national security threat under an obscure Cold-War era statute. The report and its recommendations have not been made public; Trump has until the middle of May to choose a course of action.
On Wednesday, Trump said his decision would hinge on how talks with the EU proceed.
He has long threatened to impose hefty tariffs on European autos and auto parts. Tensions heightened last year after Trump slapped tariffs on foreign steel and aluminum, leading the EU to retaliate with tariffs on American products. The President reached a ceasefire with European Commission President Jean-Claude Juncker last July, when the two agreed to pursue a bilateral trade deal.
Although they initially agreed to a narrow framework for a deal that would affect primarily non-auto industrial goods, the United States and the EU are now worlds apart on what should be included in the deal. Trump’s administration, under pressure from Congress and the American agriculture industry, now wants to ink a comprehensive deal that would open up European markets to agricultural products, which the Europeans say would be a dealbreaker.
“The United States can’t have a trade agreement with Europe that doesn’t deal with agriculture, and their view is that they can’t have one that does,” US Trade Representative Robert Lighthizer told the Senate Finance Committee last week.
Agriculture has long been one of the most contentious aspects of the trade relationship – it was the Obama administration’s primary stumbling block during drawn-out negotiations for the uncompleted Transatlantic Trade and Investment Partnership with the EU.
Whereas the Obama administration’s efforts seemed to hit a wall in the third year of talks, the Trump administration has reached a stalemate before negotiations have even begun in earnest.
“Tariffs create tensions that don’t exist in normal trade negotiations,” observed conservative one trade lobbyist, who spoke on the condition of anonymity because he was not authorized to speak about the matter publicly. “With the tariffs in play, it’s a bit of a hostage situation.”
While Trump’s strategy of trade restrictions and bluster may have brought the Europeans to the table in the first place, it hasn’t yet been able to dismantle the deeply entrenched political dynamics that have stumped negotiators in years past.
“The EU is not going to be threatened to change food rules. That is the opposite of which way the debate’s going in Europe and the UK generally on food rules,” said David Henig, who negotiated TTIP for the United Kingdom.
American negotiators want to see trade barriers for agricultural products lifted, but EU member states are standing firm on food safety standards and restrictions on genetically modified foods. France is especially outspoken about avoiding agriculture in the bilateral trade talks.
“The Commission is really frustrating to deal with,” said Henig, now the director of the UK Trade Policy Project at the European Centre for International Political Economy, in a phone interview with CNN. “The Commission has found very clever ways not to do what you want them to do. So has USTR, actually. They’re both very formidable when you get down to them. They’re probably more similar than they wish to admit.”
But different administrations have different styles. Henig said the United States was far from a nice negotiating partner five years ago, but the White House “was a little bit more targeted and a little bit more sensitive to what was likely to be achievable than it is now.”
Republicans in Congress have pushed back on the potential auto tariffs, with some key lawmakers – such as Senate Finance Committee Chairman Chuck Grassley, of Iowa – planning to advance bipartisan legislation to roll back Trump’s power to impose such restrictions unilaterally.
They haven’t managed to convince the President to stand down. About a dozen Republican senators who attended a nearly two-hour trade meeting with Trump and some of his top economic advisers last Wednesday were tight-lipped about what took place after the conversation.
But one Republican senator who went to the meeting told CNN that Trump “absolutely” pushed back on the senators’ aversion to auto tariffs and emphasized “his willingness to use them and the concessions he thought he was getting by having that on the table.”
Senate Republican Whip John Thune, of South Dakota, confirmed Trump wasn’t deterred by the senators’ remarks.
“They want to be able to have all the tools in their toolbox to get the attention of some of these countries we’re trying to deal with,” Thune said of the White House’s position. “I hope that doesn’t become necessary, but I guess based on what I heard today, I don’t think I would rule anything out.”