German Chancellor Angela Merkel said Thursday she would back opening talks with trading partners on lowering automobile tariffs, in what appeared to be an olive branch to US President Donald Trump as the EU battles to dissuade him from imposing hefty levies on European cars.
But Merkel said that any negotiations on lowering tariffs in one area could only be conducted with "all the countries with which we have trade in cars," rather than just with the United States.
A deal with the US alone "would not conform with WTO" rules, she said.
"We can either have negotiations about a wide range of tariffs, for 90 percent of goods," Merkel said in a reference to the stalled talks for a transatlantic free-trade deal known as TTIP.
"Or we can talk about one type of goods, but then we must accord the same treatment to all trading partners of the world. That's an option I could imagine," she added.
Merkel's offer came after US ambassador in Berlin, Richard Grenell, hosted bosses of Germany's biggest car firms for talks on Wednesday when he called on the EU to bring tariffs to zero on car imports -- in exchange for equal treatment by the US.
Noting that the EU will negotiate as a bloc, Merkel said European Commission chief Jean-Claude Juncker would be heading to Washington for talks in a bid to head off a trade war with the US.
A European source speaking on condition of anonymity said the bloc's Trade Commissioner Cecilia Malmstroem in a meeting with EU ambassadors "mentioned among options being studied a multilateral deal on cars".
Such an accord would include the EU, China, Mexico, Japan, Canada and South Korea, added the source.
- Prevent a 'trade war' -
Trump on Sunday charged that Europe is "possibly as bad as China" on trade, as he reiterated that he is mulling import taxes of 20 percent on EU cars, after having already imposed punitive duties on steel and aluminium.
The EU has slapped tariffs on iconic US products including bourbon, jeans and Harley-Davidson motorcycles, as a symbolic tit-for-tat response to the metal duties.
In a speech to German lawmakers on Thursday, Merkel said both sides were already effectively locked in a "trade conflict".
"It is worthwhile to prevent this conflict from becoming a real war," she said, adding however that this "would require both sides" to take steps.
Willingness from Europe's biggest economy and major automobile producer Germany to cut car tariffs might please Trump, who had during the G7 summit suggested that the bloc of industrialised nations become a free-trade zone.
His proposal was however overshadowed by rows over a multitude of other issues, including his decision to quit the hard-fought Iran nuclear deal.
For captains of the auto industry however, the prospect of zero tariffs on their product could not be more tantalising.
BMW, which has a factory employing 10,000 in South Carolina, told AFP it "supports increasing trade through the reduction of tariff and non-tariff barriers, particularly those that impact automotive trade between the US and the European Union."
The German Chamber of Commerce and Industry also voiced its backing for the zero-tariff offer.
"It's better to discuss lowering taxes rather than escalating" the trade conflict with new tariffs, said Martin Wansleben, who heads the chamber.
In a sign of the jitters surrounding the industry, talk of slashing taxes was sufficient to buoy the markets, with shares in auto giants all outperforming the DAX index.
Merkel says any negotiations on lowering car tariffs can only be conducted internationally -- not just with the US