German Chancellor Angela Merkel said she would support reducing tariffs applied by the EU to cars imported from the U.S., which has offered to withdraw threats to slap additional duties on European vehicles if the bloc scraps duties on cars imported from the U.S., Reuters reported.
Merkel said negotiations over EU tariffs such as those imposed on cars "need a common European position and we are still working on it."
But cutting tariffs on U.S. car imports would also require the same action for vehicles exported by other countries to the EU in adherence to World Trade Organization rules, Merkel added.
"I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the U.S.," Merkel was quoted as saying by Reuters.
A Financial Times report said the EU was considering talks with other major car exporters, such as the U.S., South Korea and Japan, regarding a deal that would cut tariffs between participating countries and prevent a trade war.
The U.S. implements import tariff rates of 2.5% and 25% on cars and trucks, respectively, Reuters reported. The EU applies a 10% levy on American car imports.
Richard Grenell, the U.S. ambassador to Germany, has discussed the tariffs issue with executives of German automotive companies including Volkswagen AG, Bayerische Motoren Werke AG and Daimler AG, according to Reuters, which cited an industry source.
Grenell told the executives that President Donald Trump could abandon his threat to impose a 20% tariff on all EU car imports if the EU agrees to remove duties on cars exported by the U.S.
Volkswagen shares closed 4.05% higher, BMW's stock jumped 3.72% and Daimler gained 3.76% at market close.
Trump issued his tariff threat on EU cars the same day the bloc applied levies on €2.8 billion of U.S. goods in response to Washington's steel and aluminum tariffs.