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Trump reignites trade battle with Europe

January 22, 2020

After securing a trade truce with China, the US president has now turned to the EU. Trump threatened car tariffs if European countries implement a digital tax. The EU says a new deal could come "in a few weeks."

US President Donald Trump at the World Economic Forum in Davos, Switzerland
Image: picture-alliance/AP Photo/E. Vucci

US President Donald Trump vowed on Wednesday to make good on threats to impose high tariffs on European cars if the bloc doesn't agree to a long-delayed trade deal with Washington.

"They are more difficult to do business with than China," Trump told reporters at the World Economic Forum (WEF) in Davos.

The US leader said that the tariffs, which would hit Germany's car industry especially hard, could amount to 25%.

"Ultimately it will be very easy because if we can't make a deal, we'll have to put 25% tariffs on their cars," Trump told Fox Business News in Davos.

German Ambassador to the US Emily Haber said the EU would respond to additional US tariffs with targeted retaliatory measures.

Trump: 'I wanted to wait'

European Commission President Ursula von der Leyen, who met with Trump for the first time on Tuesday, said that Brussels was working to secure a deal to avoid car tariffs.

Von der Leyen told news agency DPA that the bloc hopes to have a deal "in the next few weeks." She did not, however, mention how comprehensive the deal would be.

Trump has set his sights on the EU after striking a Phase 1 trade deal with China in January, after years of a trade war that destabilized the world economy.

"I wanted to wait till I finished China, to be honest with you. I always like to be very transparent. I wanted to wait 'til I finished China. I didn't want to go with China and Europe at the same time," Trump told Fox Business News.

Read more: Social entrepreneurs meet at World Economic Forum in Davos

Digital tax in crosshairs

Trump's comments also came on the heels of similar threats from US Treasury Secretary Steven Mnuchin, who said the tariffs could come if European countries don't back off from their digital tax plans.

"If people want to arbitrarily put taxes on our digital companies we will consider putting taxes arbitrarily on car companies," Mnuchin told a WEF panel.

Under pressure from Washington, France said on Wednesday it was putting its plans for a digital tax on hold. The Trump administration previously threatened to put duties of up to 100% on French goods like handbags and wine.

The UK defended its digital tax plans, which would target US tech giants such as Google, Amazon, and Facebook, saying they are "proportionate" and "temporary."

"We plan to go ahead with our digital services tax in April," said the UK's finance minister Sajid Javid.

Trade relations between the European Union and the United States deteriorated shortly after Trump took office three years ago.

A tentative truce was formed in July 2017 after Washington and Brussels agreed to pursue a trade deal, but negotiations have stalled since then over issues including farming.

rs/rc (AFP, Reuters, AP)

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