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EU seeking US trade deal ahead of August 1 deadline

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US-EU talks moving fast, officials and industry sources

say

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Easing of US car tariffs essential for a deal, EU diplomat

says

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US imposed 25% import tariff on cars in April

By Christoph Steitz, Julia Payne and David Lawder

FRANKFURT/BRUSSELS/WASHINGTON, July 9 (Reuters) -

B russels is discussing with U.S. counterparts a range of

measures aimed at protecting the European Union's auto industry

from steep U.S. import duties, including tariff cuts, import

quotas and credits against the value of EU automakers' U.S.

exports, industry sources and trade officials say.

The talks are part of efforts by the European Commission,

the bloc's executive branch, to reach a trade agreement outline

with the United States in the coming days, ahead of the August 1

deadline set by U.S. President Donald Trump for broad tariff

increases.

Trump said on Tuesday he would "probably" tell the EU within

two days what rate it could expect for its exports to the U.S.,

adding that the 27-nation bloc had become much more cooperative.

EU negotiators have sought relief from tariffs in key

sectors such as autos and aerospace. One EU diplomat previously

said cars were a "red line" for the bloc, making a U.S.

concession on cars a caveat of any deal.

Since April, EU carmakers have incurred a 25% U.S. import

tariff on top of the 2.5% already in place. The levy is separate

from Trump's prior threatened 20% "reciprocal" tariff announced

in April but dialed back to 10%.

Discussions are ongoing and it is unclear if the U.S.

administration will agree to all terms from its biggest

bilateral trading partner, the sources said.

The White House, the U.S. Trade Representative's Office and

the Commerce Department did not immediately respond to requests

for comment on the U.S.-EU negotiations. The European Commission

also had no immediate comment for this story.

EU trade chief Maros Sefcovic said on Wednesday the

Commission has made good progress on a framework trade agreement

with the United States and a deal may be possible in the coming

days.

The sources - two European industry sources, three European

officials and three U.S. industry sources familiar with the

talks - declined to be identified because the talks are

confidential.

EXPORT CREDITS

A U.S. source and one European official said things are

moving "fast" in the negotiations.

On the table is a proposal that would provide some relief

from import tariffs for carmakers that produce vehicles in the

United States and export them to other countries, three of the

sources said.

Under that plan, carmakers that export vehicles from the

U.S. would get credits for that export value, which could then

be applied against the value of any imports from the EU into the

U.S., the U.S. source said.

That would allow companies to import that value of vehicle

duty-free or at a reduced rate, while anything above it would be

subject to the maximum tariff.

Such a mechanism would benefit carmakers BMW and

Mercedes-Benz, which both have major production hubs in the

United States for sport-utility vehicles, with a significant

share of their output exported.

Two sources said the U.S. had offered some relief if a

company agrees to make additional investment, a mechanism that

would help Volkswagen, which barely exports out of U.S. plants

but is weighing a local factory for its Audi brand.

The terms are a delicate balancing act for Brussels as it

tries to find concessions that are acceptable to carmakers such

as BMW, Porsche, Volkswagen

and Mercedes-Benz, as well as to the Trump

administration, which wants to boost U.S. manufacturing and

create jobs.

TARIFF RATES, QUOTAS DISCUSSED

Europe shipped nearly 758,000 cars worth 38.9 billion euros

($45.57 billion) to the U.S. in 2024, more than four times as

many as in the other direction, according to data from European

auto association ACEA.

Two of the sources said the framework may be similar to the

one agreed with Britain in May. In that deal, the U.S. cut

tariffs on British-made cars to 10% and British carmakers

received a import quota of 100,000 cars a year at the lower

tariff rate, almost the total Britain exported last year.

While the EU had proposed a similar tariff-rate quota with a

certain number of vehicles imported, two U.S. industry sources

said the Trump administration was leaning against this.

Three sources said both sides have discussed cutting their

respective auto import tariffs from current levels - 27.5% for

imports into the U.S., and 10% for imports into the EU.

Non-tariff elements such as standardising regulation, for

example in the area of auto safety tests, are also being offered

by the EU, one of the people said.

($1 = 0.8536 euros)