U.S. trade deal was on brink of collapse, Juncker says

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"What we've agreed to is not to impose automotive tariffs while the negotiations are under way".

After crunch talks with the European Commission President, Mr Trump said both sides had agreed to "work together towards zero tariffs".

"So we had a big day, very big", the USA president said on Wednesday, standing alongside European commission president Jean-Claude Juncker.

The late-afternoon news that the meeting had eased transatlantic trade tensions fed a powerful late rally on Wall Street.

So the fact that Trump's tariffs are generally unpopular, even in Midwestern states, doesn't matter politically almost as much as their potential appeal to the narrow slice of blue-collar swing voters that he needs if he's going to be re-elected.

Punishing US metals tariffs angered Washington's major trading partners including the European Union and sparked retaliation against important American exports, spooking global stock markets.

The US has imposed 25 per cent tariffs on US$34 billion worth of Chinese imports - triggering retaliation from Beijing - with another US$16 billion to be targeted soon. In particular, USA corn and soybean farmers, whose business with China has ballooned in the past decade, have been extremely anxious about the effects of Trump's trade moves.

Juncker, who has previously spoken out against United States tariffs on steel and aluminium, said, "And just as we share the same concerns, we also have common opportunities that we need to capitalise on".

That's because President Trump is leading a new trade war with China that's put American farmers on the front lines whether they like it or not. "It's a first step. But it's been hard these last few weeks to see any light at the end of the tunnel", with no signs of progress with the EU, Mexico, Canada or China.

One key aspect of the agreement, according to the official who spoke on condition of anonymity, was that the two sides had agreed to work together to tackle China's market abuses. That would head off the threat of another round of European Union tariffs on $20 billion in U.S. exports.

But Trump's reelection campaign's chief operating officer, Michael Glassner, said campaign merchandise is "100% made in the United States of America". Juncker said that as long as negotiations are ongoing, "we will hold off on further tariffs and reassess existing tariffs on steel and aluminum".

"These possible negotiations will not concern agricultural goods, there may be some reference to soybeans", an European Union official said on condition of anonymity, adding that the increased imports were already reflected on the market.

"This was a very big day for free and fair trade", Trump said.

The Alliance of Automobile Manufacturers, a group of major automakers that includes General Motors Co. and Toyota Motor Corp., welcomed the effort to negotiate a solution that will lower trading barriers, rather than increase them.

An EU official said there was significant pressure from Trump administration officials to increase EU soybean purchases as part of any trade deal. The EU has been readying retaliatory taxes on USA products.

Juncker said striking a deal on zero tariffs on industrial goods was his "main intention", adding, "I had one intention today, to make a deal, and we made a deal".

"We have made it clear all along that all of our merchandise is 100% made in the USA".

Germany's Economy Minister described the agreement - which means Washington will not follow through with a threat to impose tariffs on autos that would hurt the dominant German vehicle industry - as a "breakthrough" that "can avoid trade war".