Merkel Says She’s Open to Car Tariff Talks, Though Only Globally

(Bloomberg) -- Chancellor Angela Merkel put the brakes on a discussion between the U.S. and German carmakers to take EU-U.S. car tariffs to zero, saying she's only open to talks that conform with global rules.

News of a reprieve in trade tension -- in contrast to latest threats of a 20 percent tariff by President Donald Trump -- sent industry shares soaring Thursday. A spokesman for the U.S. embassy in Berlin later tempered the plan, first reported by Handelsblatt, to say no offer had been put on the table and the meeting served as a discussion, not a negotiation.

The European Union is working on a joint position for tariff talks, possibly including automobiles, and any such negotiations would require equal treatment of all trade partners under World Trade Organization rules, Merkel said at a news conference in Berlin on Thursday.

“Talks on tariffs, on reducing tariffs, for which I'm prepared, can't only be done with the U.S.,” Merkel said. “Rather, we have to do it with all countries with which we have trade in automobiles, because otherwise it wouldn't conform with WTO.”

CEO Meeting

Merkel was responding to a question about calls by a German business group for negotiations to lower U.S. import barriers for German cars to zero. U.S. Ambassador Richard Grenell met the chief executive officers of Volkswagen AG, Daimler AG and BMW AG in Berlin on Wednesday to discuss looming American duties on car imports from the EU.

The meeting took place to help communication as part of broader talks on trade, the embassy spokesman said. No formal proposal was on the table and the U.S. administration doesn't envision a separate deal, according to a person familiar with the matter who asked not to be identified.

Handelsblatt reported earlier that Grenell told participants the U.S. government was seeking talks with the EU and the German government with a proposal to reduce tariffs to zero.

The EU isn't allowed under global rules to reduce its 10 percent tariff on American cars unless the bloc either does so for all WTO members or reaches an accord with the U.S. that covers “substantially all” two-way trade.

EU trade chief Cecilia Malmstrom said last week there is “no way” EU governments would agree to scrap the bloc's car-import duty for all WTO members, leaving the option of going for a broader commercial deal with the U.S.

“You can either discuss a broad swath of tariffs for 90 percent of goods, or you can select particular variants or groups, but then you have to ensure the equal treatment of all global trade partners,” Merkel said. “That could well be an option that I can imagine.”

--With assistance from Birgit Jennen, Elisabeth Behrmann and Jennifer Jacobs.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Tony Czuczka, Richard Bravo

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