Trump-Juncker Follow-up Agenda – Set Ground Rules, Avoid Car Wars, Deliver Food

Talks start on August 20 to formalize commitments made by President Trump and President Juncker to cut duties between the U.S. and EU while boosting EU imports from America. At a minimum the talks need to confirm what structure a deal will take. It will likely need to be transactional rather than being a formal FTA to avoid Trade Promotion Authority consultations. Nonetheless it will still be significant given the U.S. merchandise trade deficit with the EU was $159 billion in the 12 months to June 30.

The automotive industry needs to be central to discussions with $63 billion of EU exports to the U.S. threatened by America's section 232 "national security" review. EU automakers appear concerned about changes with July vehicle shipments to the U.S. up 9% on a year earlier after a 14% surge in the second quarter. While increased purchases of soybeans and LNG will be on the agenda an agreement on grains (the EU imported just 4% of American corn and 3% of wheat exports) and meat (0.2% of pork and poultry) could also yield significant benefits.