US set to exempt EU from Trump tariffs

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Brussels (AFP)

The EU grew increasingly confident that President Donald Trump would grant Europe a last-minute exemption from punishing metals tariffs later Thursday as a top US official said a interim deal was clinched.

European leaders were to discuss the looming threat of a transatlantic trade war after EU Trade Commissioner Cecilia Malmstrom returned from eleventh hour talks in Washington.

Trump shocked the world with his sudden announcement earlier this month of a 10-percent levy on aluminium and 25-percent tariff on steel, angering Washington's closest allies that swiftly called for an exemption.

In the US capital, US Trade Representative Robert Lighthizer told a Senate panel that Trump had authorised a "pause" in the controversial tariffs while talks are underway to find a more permanent solution.

Argentina, Australia, Brazil, Canada, Mexico and South Korea will also be exempt from the penalties of 25 percent on steel imports and 10 percent on aluminium, along with the EU, he said.

"This corresponds very closely to what we were expecting," an EU source said on the sidelines of the summit.

But with Trump holding the ultimate authority, EU leaders were expected to await the unpredictable leader's official response, expected later on Thursday.

"I along with several European leaders have spoken with President Trump since his announcement and the United States will give their decision tonight at 2200 (1900 GMT)," French President Emmanuel Macron said as he arrived for the two-day summit in Brussels.

Attending the talks, European Parliament President Antonio Tajani said he would "await the official response and if it comes that would be good news."

The EU's confidence was comforted still further after Trump threatened a new wave of measures on Wednesday, this time singling out China for what he called the theft of US intellectual property.

- 'Don't know' -

Malmstrom made the EU's case over two days in the United States, negotiating the carve-out with US Commerce Secretary Wilbur Ross, a strong backer of Trump's "America First" policies.

"We expect that we are on that list, we don't know for sure," Malmstrom said back in Brussels.

German Chancellor Angela Merkel said "thanks" to Malmstrom "for holding intensive talks with the United States and we will see what the result is."

The likely climbdown came as Trump is expected to announce new sanctions against China, for the "theft" of US intellectual property which Beijing has vowed to meet with tit-for-tat retaliation.

Malmstrom, who returned to Brussels early Thursday, briefed EU envoys on the situation ahead of the leaders' summit in which the prospect of a transatlantic trade war is a top agenda item.

"We have made it clear that we do not want a trade war. Trade war is of no use to anyone," said Jean-Claude Juncker, chief of the European Commission, which handles trade talks for the 28 member states.

The commission however has drawn up a list of potential counter-measures, including tariffs on peanut butter and Harley Davidson motorcycles, in case Trump follows through.

Trump has already promised to spare both Canada and Mexico -- the United States' closest trade partners and fellow signatories of the North American Free Trade Agreement (NAFTA).

German Economy Minister Peter Altmaier stressed in Berlin that "fighting until the last minute is worth it", with Germany especially worried about its auto industry.

The close confidant of Merkel reported a "very positive impression" of US Commerce Secretary Ross, who he also met earlier this week in Washington for last-minute talks.

"We both know what the problem is," Altmaier said, pointing the finger instead at China.