Washington Warns Brussels Tariff Threat Could Return

The U.S.-European trade truce struck last summer that’s helped keep punitive tariffs at bay is at risk of unraveling, with America’s top diplomat to the European Union citing a lack of good will and progress in negotiations, Bloomberg informs.

“The good faith and understanding that existed on July 25 has not been followed through on,” U.S. Ambassador to the EU Gordon Sondland said in an interview in Brussels, referring to the day President Donald Trump met with European Commission President Jean-Claude Juncker to discuss trade.

The meeting was supposed to launch a “phase of close friendship” and “strong trade relations,” according to a joint statement at the time. And while official trade talks haven’t yet started, a disagreement over how to proceed and what was even agreed upon at the encounter has left the two sides at an impasse, Bloomberg notes.

The deteriorating relations come at a difficult time, with the U.S. Commerce Department poised to present a report on the national-security implications of auto imports to the President that could lead to tariffs on foreign cars. Trump used the same argument last year to hit steel and aluminum imports with duties, which led the EU to retaliate with its own targeted tariffs.

Complicating matters is the fact that the two sides don’t agree on what was included in the scope of their discussions, particularly when it comes to agriculture. The joint statement said efforts would be made to ease trade in non-auto industrial goods, pharmaceuticals, chemicals, medical products and soy beans while opening markets for farmers and workers, Bloomberg writes.

“It said very clearly, without doubt — and I was in the room where it happened so I know this — that agriculture would not be in,” EU Trade Commissioner Cecilia Malmstrom said Jan. 18, describing the July meeting between Trump and Juncker.

Sondland says the EU has “misrepresented” what was discussed and that Juncker explicitly said agriculture would be included in the negotiations but that it would be left out of the statement to provide the EU political cover.

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