Dutch Prime Minister Mark Rutte and US President Donald Trump in the Oval Office at the White House in Washington, the US, on July 2 2018. Picture: REUTERS/LEAH MILLIS
Dutch Prime Minister Mark Rutte and US President Donald Trump in the Oval Office at the White House in Washington, the US, on July 2 2018. Picture: REUTERS/LEAH MILLIS

Washington/Brussels/Mexico City — US President Donald Trump warned the World Trade Organisation (WTO) on Monday that "we’ll be doing something" if the US is not treated properly, just hours after the EU said that US automotive tariffs would hurt its own vehicle industry and prompt retaliation.

Trump, speaking to reporters during a meeting with Dutch Prime Minister Mark Rutte at the White House, said, "The WTO has treated the US very, very badly and I hope they change their ways."

His comments came after the Axios news website reported that Trump’s administration had drafted proposed legislation that would allow Trump to raise tariffs at will and negotiate special tariff rates with specific countries — two basic violations of WTO rules.

The US has "a big disadvantage with the WTO. And we’re not planning anything now, but if they don’t treat us properly, we’ll be doing something," Trump said, without elaborating.

Last week, a source familiar with Trump’s thinking told Reuters that the president had privately expressed a desire to quit the WTO, but that it was not a serious proposal.

Later on Monday, White House spokesperson Sarah Sanders said Trump was focused on fixing problems in global trade, not on leaving the trade organisation that has been a foundation of the postwar global trading system.

"Right now he’d like to see the system get fixed, and that’s what he’s focused on doing," Sanders said. "He’s been clear that he has concerns, that there are a number of aspects that he doesn’t believe are fair. And China and other countries have used the WTO to their own advantage. We’re focused on fixing the system."

US-EU trade talks?

During his meeting with Rutte, Trump also said that his administration would be meeting EU officials to "work something out" on trade. The US has imposed tariffs on European steel and aluminium imports and is conducting another national security study that could lead to tariffs on cars and car parts.

"I think the EU — we’re going to be meeting with them fairly soon," Trump said. "They want to see if they can work something out, and that’ll be good, and if we do work it out, that’ll be positive, and if we don’t, it’ll be positive also, because we’ll just think about those cars that pour in here, and we’ll do something, right?"

A spokeswoman for the US trade representative’s office could not be immediately reached for comment on further details about such talks.

The EU on Friday submitted comments warning the US commerce department that US import tariffs on cars and car parts were unjustifiable and would harm America’s automotive industry and were likely to lead to counter-measures by its trading partners on $294bn of US exports.

The commerce department launched its investigation, on grounds of national security, on May 23 under orders from Trump, who has frequently complained about the EU’s 10% car tariff being four times that of the US, apart from the 25% US levy on pickup trucks.

Trump said last week that the government would complete its study soon and suggested the US would take action, having earlier threatened to impose a 20% tariff on all EU-assembled cars.

The European commission, the EU executive body that handles trade for the bloc, said on Monday it was trying to convince its US counterparts that imposing such tariffs would be a mistake.

"We’ll spare no effort, be it at the technical or political level, to prevent this from happening," a spokesperson for the commission told reporters, adding that commission President Jean-Claude Juncker’s trip to Washington in July would seek to stop any new US tariffs.

The EU exported €37.4bn of cars to the US in 2017, while €6.2bn worth of cars went the other way.

In its submission, the EU said EU companies made close to 2.9-million cars in the US, supporting 120,000 jobs, or 420,000 if car dealerships and car parts retailers were included.

Imports had not shown a dramatic increase in recent years, it said, and had grown largely alongside overall expansion of the US car market, with increased demand that could not be met by domestic production.

The submission said that tariffs on cars and car parts could undermine US car production by imposing higher costs on US manufacturers. The EU calculated that a 25% tariff would have an initial $13bn-$14bn negative effect on US GDP with no improvement to the country’s current account balance.

The trade group representing Detroit car makers General Motors, Ford and Fiat Chrysler also warned the commerce department that a 25% import tariff on cars and parts would lead to a total new tax burden of $90bn a year when combined with the steel and aluminium tariffs.

"Imposing tariffs will increase costs for consumers, lessen consumer choice, lower consumer demand, reduce car and light truck production and sales, lower investment levels, and lead to job losses in the US auto sector," Matt Blunt, president of the American Automotive Policy Council, said in a statement.

Nafta restart

The victory of Mexican leftist Andres Manuel Lopez Obrador would jumpstart talks to renegotiate the North American Free Trade Agreement (Nafta), a top adviser to the presidential winner said on Monday, stressing that an agreement was possible before the next government took power in December.

Jesus Seade, Lopez Obrador’s chief negotiator for Nafta, said in an interview that the talks to revamp the 24-year-old pact had been hindered by uncertainty over the outcome of the Mexican election. After Lopez Obrador’s decisive win on Sunday, the negotiations would accelerate, Seade predicted.

"We are basically supporting what Mexico has been putting forward," he said. "And we will be more than happy to explore, proactively, ways to energise the negotiation."

Seade said he expected to work alongside Ildefonso Guajardo, the outgoing economy minister, as talks concluded. The Mexican team would meet in the coming weeks to determine its game plan, Seade said.