EU Rejects Trump Quota on Cars to U.S.

European Union trade envoys say they won’t agree to tariffs on cars shipped to the U.S. as an alternative to stiff import duties threatened by the Trump administration, Reuters reports.

The EU currently collects a 10% import tax on U.S. vehicles. The U.S. levies taxes of 2.5% on cars and 25% on light trucks from Europe. President Donald Trump has threatened to hike U.S. tariffs on European cars to 20%-25% if the EU fails to take steps that would balance trade between the two markets.

Since last summer, the two sides also have imposed punitive taxes against each other. It began when the Trump administration cited national security as a reason to impose import duties of 25% on steel and 10% on aluminum. The EU retaliated with a 25% duty on the same value of select goods—but not vehicles—from the U.S.

Last August President Donald Trump suggested the EU drop all trade tariffs, barriers and subsidies. When the bloc offered to eliminate all tariffs on cars and all other industrial goods if the U.S. would do the same, Trump dismissed the offer as “not enough.” He wants European carmakers to build more of the vehicles in the U.S.