UPDATE: U.S. Could Drop Car Tariffs if EU Does the Same

The Trump administration would be willing to eliminate all import duties on cars made in Europe if the EU does the same for U.S.-produced vehicles, Reuters reports.

Richard Grenell, the U.S. ambassador to Germany, signaled the possible deal in a meeting on Tuesday with executives from BMW, Daimler and Volkswagen on Tuesday, an industry source tells Reuters.

The carmakers met with Grenell in hopes of establishing a direct link with the White House and averting a trade war they say would cause “irreparable” damage to global trade, according to multiple reports. They said earlier that they favor the EU dropping its 10% tax on imported vehicles from the U.S., which levies a 2.5% tariff on imported cars and 25% on trucks and SUVs.

President Donald Trump is threatening to levy a 20% tax on all vehicles imported from the EU, beginning as soon as four weeks from now. Analysts note that he appears unmoved by pleas from a long list of foreign and domestic carmakers about the negative repercussions they say would result.

But World Trade Organization rules would require the EU to reduce its levy equally for all WTO members, not just on U.S. products. Germany Chancellor Angela Merkel underscored that point earlier today and said she would support EU-wide talks to lower its tariffs.