US envoy offers German car bosses 'zero tariffs' solution to trade row started by Trump

The U.S. ambassador to Germany has told German car bosses that President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the bloc lifted duties on U.S. cars, a German newspaper reported on Wednesday.

Handelsblatt said Ambassador Richard Grenell told executives from Daimler, Volkswagen and BMW during a meeting that in exchange Trump wanted the EU to annul duties on U.S. cars imported to the bloc. Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry's current business model for selling cars in the United States. Handelsblatt cited people present at the meeting, which took place at the U.S. embassy in Berlin on Wednesday. It said the chief executives of Daimler, BMW and Volkswagen - Dieter Zetsche, Harald Krueger and Herbert Diess respectively - were in attendance.

Daimler and Volkswagen declined to comment. BMW was not immediately available for comment. A spokeswoman for the German Economy Ministry also declined to comment on the report, saying issues related to the trade dispute with the United States were being handled by the European Commission in Brussels on behalf of EU member states. A European Commission spokeswoman declined to comment on the report. She said Commission President Jean-Claude Juncker would discuss trade during talks with Trump in Washington later this month. "This will be an opportunity to discuss the many issues of common interest, notably also relating to trade," the spokeswoman said.

Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States. Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminium at the start of June, ending exemptions that had been in place since March.

The EU executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminium products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.Trump's protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.