Friday 17 May 2019 3:17 pm

Trump delays car tariffs decision on EU and Japan by six months

Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

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US President Donald Trump has delayed imposing tariffs on imported cars by six months to allow for negotiations with the EU and Japan.

Global markets rallied yesterday following reports of the six-month delay and the White House confirmed the move today.

Read more: Global stocks reverse falls after reports Trump will delay auto tariffs

A US commerce department report in February concluded that imported cars and car parts posed a threat to national security.

Trump was given until Saturday to decide whether to impose tariffs but the President has now asked trade representative Robert Lighthizer to hold negotiations over the next 180 days.

Washington confirmed Trump agreed there was a national security threat causing harm to the American automobile industry and said it needed to be addressed.

The proclamation said: “US defense and military superiority depend on the competitiveness of our automobile industry and the research and development that industry creates.”

The EU has recently come under pressure from Trump’s aggressive global trade policy. The two sides have fought a war of words over tariffs, with each accusing the other of unfair subsidies for their aeroplane and aerospace industries.

Last month EU member states voted to kick off trade talks with the US.

Read more: US markets follow Europe downwards as China announces retaliation tariffs

Trump has long held the threat of tariffs over the heads of Europe’s car manufacturers. He postponed plans for such tariffs in July 2018 but kept levies on steel and aluminium, imposed in March of that year, in place.

The threat resurfaced following the commerce department report in February and Trump will make a final decision after 180 days of negotiations.