February 8, 2019 2:00 PM, EST

US Warns EU Tariff Threat Will Return Unless Juncker Delivers

MayU.K. Prime Minister Theresa May and the European Union are at odds with one another over Brexit deal. (Jasper Juinen/Bloomberg News)

The U.S.-European trade truce struck last summer that has helped keep punitive tariffs at bay is at risk of unraveling, with America’s top diplomat to the European Union citing a lack of goodwill and progress in negotiations.

“The good faith and understanding that existed on July 25 has not been followed through on,” U.S. Ambassador to the EU Gordon Sondland said in an interview in Brussels, referring to the day President Donald Trump met with European Commission President Jean-Claude Juncker to discuss trade.

The meeting was supposed to launch a “phase of close friendship” and “strong trade relations,” according to a joint statement at the time. And while official trade talks haven’t started, a disagreement over how to proceed and what was even agreed upon at the encounter has left the two sides at an impasse.

The deteriorating relations come at a difficult time, with the U.S. Commerce Department poised to present to the president a report on the national-security implications of auto imports that could lead to tariffs on foreign cars. Trump used the same argument last year to hit steel and aluminum imports with duties, which led the EU to retaliate with its own targeted tariffs.

Donald Trump

President Donald Trump and Jean-Claude Juncker in Washington, D.C. (Andrew Harrer/Bloomberg News)

‘In the Room’

Complicating matters is the fact that the sides don’t agree on what was included in the scope of their discussions, particularly when it comes to agriculture. The joint statement said efforts would be made to ease trade in nonauto industrial goods, pharmaceuticals, chemicals, medical products and soy beans while opening markets for farmers and workers.

“It said very clearly, without doubt — and I was in the room where it happened so I know this — that agriculture would not be in,” EU Trade Commissioner Cecilia Malmstrom said Jan. 18, describing the July meeting between Trump and Juncker.

Sondland said the EU has “misrepresented” what was discussed and that Juncker explicitly said agriculture would be included in the negotiations but that it would be left out of the statement to provide the EU political cover.

‘Friendly Tone’

“Agriculture was absolutely discussed in the meeting, and it was intended to be in the joint declaration,” Sondland said, adding that Juncker asked Trump to remove that particular word from the document to appease member states for whom it could be a delicate topic.

“It was an accommodation, a language accommodation,” Sondland said. “The president understood the context and he wanted to keep a very friendly tone to this meeting and he said, ‘Of course I’ll accommodate you if that helps you with some of your member countries sort of soften the tone, no problem.” ’

Sondland added that the sides had agreed to immediately work on ways to reduce nontariff barriers, but the EU hasn’t followed through.

“There have been a lot of talks but nothing; on the nontariff barriers, nothing of substance,” he said.