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Jean-Claude Juncker, the European Commission president, is coming to meet with U.S. President Donald Trump on July 25. EU Trade Commissioner Cecilia Malmstrom says she hopes the visit will ease tensions between the U.S. and EU. At the same time, she noted that Europe is preparing to increase tariffs on American goods if Trump enacts tariffs on EU vehicles.

U.S.-European Trade War

On June 1, Trump imposed tariffs on aluminum and steel coming from Europe. Since then, he has also been threatening to impose tariffs on EU-made cars and replacement parts. Malmstrom said that no American car companies asked their government to impose tariffs. She said that American car makers are doing well. At a trade conference, Malmstrom also said that the EU is preparing a list of tariffs to rebalance trade with the U.S. These tariffs would be in addition to the current $3.25 billion in tariffs on American goods. Current U.S. tariffs on EU steel and aluminum are $7.42 billion per year. If the U.S. imposed tariffs on European vehicles and car parts, the value would be nearly $60 billion. The EU Trade Commissioner warned that the EU's tariffs could increase to approximately $10.5 billion on its proposed list of products. She also said the tariffs could increase even more if they added more products to the list. EU tariffs on American goods now include a variety of products ranging from motorcycles to bourbon. Malmstrom did not give a specific list of which American products would be tariffed next.

Moving Forward

Larry Kudlow, Trump's top economic adviser, says that he expects Juncker to present an interesting plan. EU officials, however, are downplaying the novelty of Juncker’s planned offer. One idea was to remove car tariffs altogether. American car companies could import to Europe freely, and vice versa. When reporters asked Malmstrom about the idea on Thursday, she said that such an idea could work, but only as part of a larger agreement. She also said that Juncker’s visit isn’t to negotiate, but to establish good relations. She said that Juncker will try to find the best way to de-escalate the trade war and pave the road for further discussions.