Trump threatens big tariffs on car imports from EU unless it does a deal on trade

Trump holds a news conference at the 50th World Economic Forum in Davos, Switzerland. PHOTO: REUTERS

DAVOS, Switzerland (REUTERS) - US President Donald Trump on Wednesday (Jan 22) threatened to impose high tariffs on imports of cars from the European Union if the bloc doesn't agree to a trade deal.

Trump has previously made threats to place duties on European automobile imports, with the intent of receiving better terms in the US-Europe trade relationship. Trump has delayed imposing the tariffs a number of times.

"I met with the new head of the European Commission, who's terrific. And I had a great talk. But I said, 'look, if we don't get something, I'm going to have to take action' and the action will be very high tariffs on their cars and on other things that come into our country," Trump told CNBC's Joe Kernen in an interview from the World Economic Forum in Davos, Switzerland.

Former German Defence Minister Ursula von der Leyen succeeded Jean-Claude Juncker at the end of 2019 as the EU's top official, becoming the first woman to hold the post.

The European Union is as strong economically as the United States, and will respond to any additional US tariffs "in the same dimension," Germany's ambassador to the United States, Emily Haber, said at an event in Washington.

French Ambassador Philippe Etienne told the same event that the EU hoped to negotiate a settlement with Washington, warning that tit-for-tat tariffs would hurt both economies. "It is not in our interest to have an escalation of tariffs," he said.

Mike Manley, the head of European car industry lobby group ACEA, said businesses need certainty and hoped that a clash with Trump could be avoided.

"If you look at President Trump's track record I think he is incredibly serious. If the parties involved approach those discussions in a serious manner it will be possible for an amicable conclusion to be reached," Manley, who is the chief executive of Fiat Chrysler, told an industry event in Brussels.

"An escalation of the tariffs is not to the benefit of anyone," he added.

The United States has also threatened duties of up to 100 per cent on French goods, from champagne to handbags, because of a digital services tax that Washington says harms US tech companies.

Trump told CNBC that the European Union had to make a deal on trade.

"They have no choice," Trump said.

In a separate interview in Davos with Fox Business Network, Trump said the tariffs on EU cars could amount to 25 per cent.

"Ultimately it will be very easy because if we can't make a deal, we'll have to put 25 per cent tariffs on their cars," Trump told Fox Business' Maria Bartiromo in an interview.

The United States struck a Phase 1 trade deal with China in January, soothing some of the worries which have hampered the world economy in recent time.

Asked if a trade pact with Britain could come next, Trump told CNBC he was ready to make a deal with British Prime Minister Boris Johnson.

"Boris and I are friends, and he wants to make a deal, and that's OK with me," he said.

Britain is due to leave the EU at the end of January, and Johnson has stated that one of the main advantages of being outside the bloc would be the ability for Britain to negotiate its own trade deals, including with the United States.

"We're starting. We've already started negotiating" with Britain, Trump said.

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