Major Car Exporters Said to Plan Meeting Amid U.S. Tariff Threat

(Bloomberg) -- Major car-producing nations are due to meet without the U.S. to discuss possibly coordinating their response to President Donald Trump’s threat of tariffs.

Representatives of the European Union, Canada, Mexico, South Korea and Japan will convene in Geneva on July 31 to debate how to respond if the U.S. imposes levies on car imports, as well as prospects for reforming the World Trade Organization, according to three people familiar with the matter. Two officials said participants will explore the possibility of an international accord to cut tariffs on cars, although two other officials said this was not part of the formal agenda.

While European Commission President Jean-Claude Juncker and Trump agreed this week to refrain from “unilateral actions” as the EU and the U.S. negotiate a trade pact, a Commerce Department investigation under an act that permits the imposition trade restrictions if car imports are found to harm national security is still ongoing, keeping up the pressure on major exporting nations.

U.S. Probe

"We’ve been directed by the president to continue the investigation, get our material together but not actually implement anything pending the outcome of the negotiation," U.S. Commerce Secretary Wilbur Ross said on July 26. "What we’ve agreed to is not to impose automotive tariffs while the negotiations are under way."

The threat of tariffs on car imports and levies already imposed on other goods including steel have strained relations between the U.S. and its closest allies. Trade protectionism adds to a series of disputes, ranging from climate change to Middle East policy, which have upended the ties binding together developed nations since Trump’s election in office.

Though the U.S. auto industry has roundly rejected the need for new tariffs, major car exporters fear Trump could still forge ahead with duties after the Commerce Department releases its report in late August or September. In recent weeks, EU trade officials have mulled the possibility of launching a sectoral negotiation among the world’s major auto-producing nations in the hopes of deterring Trump from imposing auto tariffs.

‘Plurilateral’ Deals

Such “plurilateral” accords are trade deals among a group of like-minded countries that are typically limited to certain sectors of goods or services. The WTO permits this type of negotiation as long as the benefits are provided to all of its members.

Though such a “plurilateral” accord could potentially appease Trump’s concerns about high levies on American car exports, a formal debate on such a deal -- with the potential to upend the entire car industry by cutting levies across the globe -- would require a political mandate.

Participants planning to attend the meeting include EU’s Director-General for Trade Jean-Luc Demarty, Mexico’s Undersecretary of Foreign Trade Juan Carlos Baker, Canadian Deputy Minister of International Trade Timothy Sargent and Japanese Senior Deputy Minister for Foreign Affairs Kazuyuki Yamazaki, according to the people familiar with the matter.

--With assistance from Viktoria Dendrinou, Yuji Okada and Sohee Kim.

To contact the reporters on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net;Jonathan Stearns in Brussels at jstearns2@bloomberg.net;Esteban Duarte in Madrid at eduarterubia@bloomberg.net

To contact the editors responsible for this story: Richard Bravo at rbravo5@bloomberg.net, Nikos Chrysoloras, Steve Geimann

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