President Donald Trump officially delayed applying tariffs on cars made in Europe and China Friday, a welcome pause in the global trade war that pared losses for U.S. stocks heading into the opening bell.
The White House confirmed the decision, which had been hanging over markets for several weeks, adding that U.S. Trade Representative Robert Lighthizer would pursue further talks with officials in Brussels and Tokyo and report back to the President in three months' time.
"United States defense and military superiority depend on the competitiveness of our automobile industry and the research and development that industry generates," said White House press secretary Sarah Huckabee-Sanders. "The negotiation process will be led by United States Trade Representative Robert Lighthizer and, if agreements are not reached within 180 days, the President will determine whether and what further action needs to be taken."
Trump had been expected to make a decision on the tariffs this weekend, following a report U.S. Commerce Department he received on February 17 that studied whether imported cars and other automotive parts pose a threat to national security under section 232 of the Trade Expansion Act.
Normally, the President would have 90 days to act upon the report, but he also has the ability to delay a decision if he is deemed to be in ongoing trade negotiations with the country or region upon whom the tariffs would apply.
Commerce Secretary Wilbur Ross said Thursday that the President Donald Trump had "many options" respect to the waving of tariffs on steel and aluminium imports, which are holding up ratification of the President's re-negotiated NAFTA deal.
European carmakers had been under pressure from comments made during President Donald Trump's State of the Union Speech to Congress earlier this year, when he urged lawmakers to pass the United States Reciprocal Trade Act, "so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the exact same product that they sell to us."
The remarks were seen as a direct broadside to Europe, which applies a 10% levy to U.S.-made cars against the 2.5% level put in place by Washington.
The EU exported around 1.155 million cars to the U.S. market last year, according to the European Automobile Manufacturing Association, with total value of just over €37.3 billion ($41.8 billion). The U.S, in contrast, moved only 267,653 cars in the other direction, a value of just €5.5 billion but still nearly 20% of the sector's entire international export base.
Last year, the President threatened to apply a 20% tariff on all cars coming into the United States from the European Union on the same day that the EU imposed its own retaliatory tariffs on $3.4 billion worth of U.S. goods in response to the Trump administration's levies on non-American steel and aluminium products.