France warns against rushing into tariff cut to defuse tensions

[PARIS] French Finance Minister Bruno Le Maire warned on Wednesday against rushing into an EU tariff cut on US car imports to appease Washington, saying France and Germany should look at the impact on the car industry first.

With Germany's powerful car industry facing the threat of higher US duties, Chancellor Angela Merkel said last Thursday she would back a lowering of European Union levies on imports of US cars.

"Before considering any solution, it's important that France and Germany look together at the impact on the car industry and that's what we are going to do in the coming weeks," Mr Le Maire said after a meeting with German Economy Minister Peter Altmaier.

Mr Altmaier said that Germany had not yet made a definitive decision on what action to take and wanted to see how a visit to Washington by European Commission chief Jean-Claude Juncker goes.

"It's important to explore all the possible solutions so that in the end we adopt a joint Franco-German position and then a European position," Mr Altmaier said.

The United States currently imposes a 2.5 per cent tariff on imported passenger cars from the EU and a 25 per cent tariff on imported pickup trucks. The EU imposes a 10 per cent tariff on imported US cars.

Under World Trade Organization rules, the EU has little room to lower import tariffs for only US-made cars and would likely have to reduce them for all WTO members.

While French carmakers would be little affected by US tariffs because they have little exposure to the American market, they would face stiff competition from Asian producers if EU tariffs were cut, a prospect that worries the French government.

REUTERS