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Donald Trump and Jean-Claude Juncker agree on tariffs U-turn

July 25, 2018

The leaders agreed to work toward "zero tariffs" between the US and the EU, which would decisively reverse the slew of trade tariffs imposed recently. The deal involves the EU purchasing natural gas from the US.

Jean-Claude Juncker and Donald trump speak at the White House
Image: Reuters/J. Roberts

US President Donald Trump and European Commission President Jean-Claude Junker met at the White House on Wednesday, where they announced that the US and the European Union would work to reduce tensions that have arisen from Trump's confrontational trade policy over the past few months .

The meeting comes after weeks of acrimony between the US and EU — which account for 50 percent of global trade — as both sides slapped tariffs on one another.

Major points announced

In an unexpected press announcement in the Rose Garden, Trump and Juncker laid out the major goals that they had agreed upon in their meeting:

  • The US and the EU would work toward "zero tariffs, zero nontariff barriers, and zero subsidies on nonauto industrial goods," Trump said.
  • The EU would buy significant amounts of liquid natural gas from the US to help diversify the bloc's energy sources, as well as increase its imports of US-grown soybeans.
  • Both sides will hold off from imposing any further tariffs and will reassess existing tariffs on US steel and aluminum as long as trade talks remain ongoing.
  • Both the US and the EU would work to reform the World Trade Organization (WTO), which Trump has criticized for unfairness toward the US.

Donald Trump and Jean-Claude Juncker announce trade goals

Statements from Trump and Juncker

  • Trump said the US and the EU had launched "a new phase of close friendship and strong trade relations in which both of us will win."
  • "If we team up, we can make our planet a better, more secure and prosperous place," Trump added. 
  • Juncker described his talk with Trump as "a good and constructive meeting."
  • "We made a deal today," the European Commission president said. "We have identified a number of areas on which to work together."

Prior to their statements on the White House lawn, the two leaders had voiced optimism in a press briefing that common ground could be found on the contentious issue of trade tariffs.

DW's Washington bureau chief, Alexandra von Nahmen, was in the room and described the greeting between the two men as "quite friendly" but noted there was a "tense" air.

Juncker: US, EU are 'close partners, not enemies'

A new direction in trade?

  • If trade barriers between the US and the EU are eventually reduced following future talks, the result would be a significant U-turn from Trump's protectionist policies toward the European Union, which he has called a "foe" of US trade.
  • Trump had threatened to impose 25 percent tariffs on auto imports, which would have a strong impact on German automakers such as BMW and Volkswagen. Though both he and Juncker said no new tariffs would be imposed as long as trade talks remained ongoing, it was unclear whether or not Trump had backed away from eventually slapping import fees on foreign cars, given the "nonauto industrial goods" exception he pointed out.
  • The US has criticized the EU's — and in particularly Germany's — imports of Russian energy sources, and Juncker's stated intent to import liquefied natural gas from the United States built on the European Commission's desire to diversify energy imports.
  • Juncker's willingness to reform the WTO with Trump aligns the EU with the US against China. Trump has criticized the trade organization's failure to address advantages that China creates for itself through its state-run economy.
  • The EU's commitment to buy soybeans can be billed by Trump as a success in advocating for US farmers. On Tuesday, the White House announced emergency aid to farmers hurt by retaliatory tariffs on agricultural products.

Read more: Whom does the EU call if it wants to call the US? 

Trump says he hopes to strike trade deal with Europe

Reactions from the EU, US

Peter Altmaier, Germany's economic affairs minister, congratulated the two leaders on the outcome of Wednesday's meeting, writing on Twitter that it was a "breakthrough" that could avoid a trade war "and save millions of jobs."

A top German trade representative greeted the announcement with more caution, however, warning that the issue of US auto tariffs had not yet been resolved. Eric Schweitzer, the president of the Association of German Chambers of Commerce and Industry, told reporters shortly after Trump and Juncker's statements that "the proposed solutions move in the right direction, but a significant portion of skepticism remains."

Meanwhile, in the US, various Republican leaders hailed Trump's progress in trade relations with the EU.

Joni Ernst, Republican Senator from Iowa, a major farm state, celebrated the news of soybean purchases:

But Anthony Gardner, a former US ambassador to the EU, dismissed the announcement as "absurd" in a serious of tweets that pointed out that the European Union as a bloc cannot purchase commodities:

How we got here: Trump had consistently criticized the EU for its trade policies, which he says put the United States at a disadvantage. He launched the first salvo in late June by slapping import tariffs on foreign steel and aluminum. The EU retaliated by putting its owns tariffs on US goods such as Harley-Davidson motorcycles and Levi's jeans. 

Tit-for-tat: Earlier on Wednesday, the EU threatened retaliatory tariffs worth $20 billion (€17 billion) should the US make good on its vow to raise tariffs on European automobiles. German carmakers have been a favorite target of Trump's, becoming the subject of a number of aggressive tweets and public statements.

cmb, js/se (AP, AFP, Reuters) 

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