The European Union is prepared to reduce its 10% car import tariff to align closer with the US rate of 2.5%, as part of efforts to de-escalate trade tensions with Washington, according to Bernd Lange, head of the European Parliament’s trade committee. In an interview with the Financial Times, Lange stated, “We can try to have a deal before escalating costs and tariffs.” The EU is also offering to increase purchases of US liquefied natural gas and military equipment as part of the proposed agreement.
The move comes amid fears that former President Donald Trump could follow through on threats to impose tariffs on European cars, citing an imbalance in trade. Trump has previously criticized the EU for not buying enough American cars or farm products. The proposed tariff reduction would also apply to China and other countries under World Trade Organization (WTO) rules. “We have bound tariffs for cars at the WTO at 10%, but to show fair relations, it might be possible to reduce them,” Lange added.
The EU’s car industry has expressed support for the tariff reduction, hoping to avoid retaliatory measures from the US. Reports suggest Trump is considering reciprocal tariffs to match those imposed by other nations, continuing a cycle of trade tensions that began with his administration’s 25% tariffs on China, Mexico, and Canada.
However, Lange warned that if negotiations fail, the EU could retaliate using a new “anti-coercion instrument” designed to target US tech and financial companies. The tool was created after Trump’s first term to counter economic pressure from other nations. “Sometimes it’s important to have a gun on the table,” Lange remarked.
The EU’s proposal reflects its commitment to resolving trade disputes diplomatically while preparing to defend its interests if necessary.
