EU Seen Getting Reprieve on U.S. Auto Tariffs, Eurasia Says

(Bloomberg) -- The European Union probably will get a temporary reprieve on the increased tariffs on automotive imports that U.S. President Donald Trump has threatened to impose, according to Meredith Sumpter, head of research strategy and operations at Eurasia Group.

“The president is looking to use these tariffs as a source of leverage in ongoing trade negotiations with the EU and with Japan,” Sumpter said in an interview with Bloomberg Television on Tuesday. Those trade talks “should make some headway this year, although both talks have had difficulties making some progress,” she said.

The European Union on Monday said the bloc could “react immediately if necessary” if Trump follows through on his threat. Trump on Sunday received the findings of a probe into whether automotive imports pose a national-security threat, the argument the president has flagged for imposing the tariffs.

Eurasia puts a 60 percent probability on Trump moving ahead with the extra duties on imports of cars and auto parts into the U.S., but Sumpter said the EU and Japan “are going to receive some sort of temporary” suspension of the measures.

“We assess that so long as the president determines that the trade negotiations with both key partners are making progress, he will not move forward with the automotive tariffs with those economies,” Sumpter said. “He’ll give them a temporary reprieve.”

The EU has prepared retaliatory duties totaling 20 billion euros ($22.7 billion) on U.S. goods should Trump follow through on the automotive tariffs. In the case of U.S. “actions detrimental to European exports, the European Commission would react in a swift and adequate manner,” Margaritis Schinas, spokesman for the EU executive, said on Monday.

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