U.S. touts EU trade deal, says others can also make progress

WASHINGTON (Reuters) – The United States will press ahead with European trade talks and also aim to strike a deal with Mexico and Canada in stalled negotiations over the North American Free Trade Agreement, U.S. Treasury Secretary Steve Mnuchin said on Thursday.

Mnuchin was speaking a day after President Donald Trump and European Union chief Jean-Claude Juncker struck a surprise deal to halt further trade tariffs and hold talks on opening markets.

The deal with the EU, which runs a $158 billion trade surplus with the United States, drove stock markets higher as it appeared to avert a further escalation of a tariff war that would have seen European cars hit with hefty duties.

Mnuchin, speaking to CNBC, also held out the prospect of re-opening talks with China if Beijing is willing to make “serious changes,” as he said the EU had indicated it was willing to do.

News of the U.S. trade ceasefire with the EU boosted global share markets to four-month highs, with European shares gaining strongly, led by the continent’s auto sector, which was up more than 2 percent .SXAP, and with Germany’s export-reliant and auto-heavy index up 1.5 percent .GDAXI.

It also boosted the standing of Juncker, a 30-year veteran of the European Union, who has recently drawn sharp criticism over his fitness for the job.

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Despite the market optimism in the wake of the pact, much remains to be resolved. The pact will bring talks over steel and aluminum tariffs imposed by the United States, a suspension of the threat of auto tariffs as well as negotiations to sell more American agriculture and energy to Europe.

It was not immediately clear that Trump, who has touted tariffs as key to bringing manufacturing jobs back to America, had abandoned his previous trade policies.


Since taking office, Trump has hit China with hefty trade duties, along with steel and aluminum producers across the globe. His threat to impose 25 percent tariffs on auto imports could have deal a blow to the global trading system of the kind not seen since the 1930s.

German Economy Minister Peter Altmaier hailed the talks as a “breakthrough” that could avoid a trade war and save millions of jobs.

Business lobbies also were relieved. “Reason has prevailed,” BusinessEurope President Pierre Gattaz said.

Some observers said that it was premature to celebrate the end of Trump’s trade offensive. Trump has long viewed America’s trade deficit as the result of foreign companies and countries “stealing” from the United States, and he has blown hot and cold between confrontation and negotiations.

U.S. Treasury Secretary Steve Mnuchin walks toward a group of reporters at the White House in Washington, U.S., July 26, 2018. REUTERS/Kevin Lamarque

Talks with China collapsed almost as soon as they started. Trump has repeatedly threatened to terminate NAFTA, which binds Canada, Mexico and the United States into a $1.1 trillion trade pact. And the U.S. relationship with Europe has deteriorated amid trade tensions and disputes over defense spending.

On the NAFTA talks with Mexico and Canada, Mnuchin said he was “hopeful that we’ll have an agreement in principal in the near future.”

“Whether it’s one deal or two deals, so long as we get the right agreement, we’re indifferent,” Mnuchin told CNBC.

Trump has come under political pressure from U.S. farmers over his trade actions that have seen American agricultural produce hit hard with retaliatory tariffs, especially by China, the largest single consumer of American soybean exports.

Mnuchin said he expected quick progress in talks with the EU, although agricultural exports could run into opposition from France, according to European commentators.

“We have an outline … in agriculture, in chemicals, in medical devices, in industrial LNG (liquefied natural gas). So we’re going to make a lot of progress,” Mnuchin told reporters.

Financial analysis firm Height said of the agreement struck with Juncker: “We expect that both sides felt immense pressure to reach some deal to stave off significant political backlash, and this tentative agreement to pause the ongoing trade war reflects that motivation.”

“With no immediate tariff reductions and all future reductions contingent on successful talks, we think it is important to appreciate this action for what it is — a step toward a solution — rather than lauding it for what it isn’t — a solution in and of itself,” it added.

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