US President Donald Trump is set to meet with European Commission President Jean-Claude Juncker to discuss trade amid growing tensions between the US and the world's biggest trading bloc.

US President Donald Trump meets with European Commission President Jean-Claude Juncker in the Oval Office of the White House in Washington, U.S., July 25, 2018
US President Donald Trump meets with European Commission President Jean-Claude Juncker in the Oval Office of the White House in Washington, U.S., July 25, 2018 (Reuters)

In the past few minutes, US President Donald Trump has reportedly secured a deal with the European Union, that could see an end to a brewing trade war. 

Under the deal, Europe will lower industrial tariffs and import more soya beans. 

Ahead of a meeting with EU officials, Trump took to twitter, saying 'tariffs are the greatest' . 

He later struck a conciliatory note as he sat down with the European Commission President Jean-Claude Juncker at the White House. 

Both sides are seeking to defuse tension in an escalating trade war brewing between some of the world's biggest economies.

Trump has already imposed tariffs on steel and aluminum imports from Europe, and the EU has responded in kind. But even that exchange of measures would pale in comparison with duties on cars — a huge industry that has long been the symbol of postwar wealth on both sides of the Atlantic, and especially in Germany.

Trump badly wants to reduce the US trade deficit with the EU and is accusing the bloc of not playing fair on trade. And when it comes to security, he says the Europeans are refusing to pay their share in NATO and instead live off the massive US defense budget.

Speaking ahead of the White House talks, Juncker admitted he was "not very optimistic," while Trump kicked off the day with a combative series of tweets vowing "no weakness" in the multiple fights he has launched with America's trade partners.

"I know Mr Trump pretty well," Juncker told German public broadcaster ZDF. "I have met him frequently and know how to deal with him."

"We are here to explain ourselves and explore ways to avoid a trade war," he said, stressing that the EU is "not in the dock – we don't need to defend ourselves."

Juncker also renewed a promise of immediate retaliatory measures should Trump make good on a threat to slap new tariffs on EU car imports.

"This is an occasion to de-dramatise any potential tensions around trade and to engage in an open, constructive dialogue," said Juncker's spokesman, Margaritis Schinas.

Trump crowed on Tuesday that his latest threat had brought Europe to the negotiating table. 

But at home, Trump is facing increasing criticism as consumers, farmers and businesses take a hit from the retaliation to the raft of US tariffs on steel, aluminum, and tens of billions of dollars in products from China that he has imposed in recent weeks. 

Jochen Stanzl, the chief market analyst with CMC Markets, joins us from Frankfurt. He says today's meeting will show if Trump is willing to negotiate a deal or if he'll continue to threaten EU member countries. 

EU Trade Commissioner Cecilia Malmstrom, who is accompanying Juncker, expressed some optimism that a solution could still be found, but also said the EU is drawing up a list of $20 billion in US products to be targeted for retaliation if the trip fails.

"We hope that this won't happen and that we can reach a solution," Malmstrom told the Swedish daily Dagens Nyheter (DN).

She said the "long list" of American goods would include machinery, agricultural and high-tech products, among others.

 'We are ready': Juncker

While Juncker is set to make a last effort to talk Trump out of the auto tariffs, which would hit Germany's dominant carmakers hard, he warned on ZDF that if the US moved ahead, "we are in a position to respond appropriately right away."

Brussels has already retaliated against the steel and aluminum tariffs, imposing punitive duties on more than $3 billion of US goods.

Juncker is not bringing any blockbuster offers to Washington, according to a senior European official who briefed reporters on condition of anonymity.

Instead, Juncker intends to get a better understanding of what the Trump administration really wants. He will also discuss the possibility of trade talks between major auto-exporting countries and of an EU-US free-trade agreement that would reduce trade barriers on industrial products, including autos.

Whatever compromise they are looking for, "the Trump administration doesn't want mutual concessions," said Edward Alden, senior fellow at the Council on Foreign Relations.

"It wants unilateral concessions" from the EU.

Canada, Mexico and China – the main target of Trump's trade offensive – have also hit back with steep duties on US goods, and have filed complaints against Washington at the World Trade Organization.

While the US claims the retaliation is "illegal," the Trump administration has acknowledged it is doing damage to American farmers, and announced it will provide up to $12 billion in aid to farmers hurt by trade tariffs.

Growing Republican backlash 

Not only is the EU firmly against the tariffs, but so is the US car industry and many voices in Congress.

Tweeting about the trade standoff on Tuesday, Trump repeated his call to remove all tariffs and trade barriers.

"Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies!" he wrote. "Hope they do it, we are ready - but they won't!"

Early on Wednesday, Trump hit back against his critics in a further series of tweets:

"Every time I see a weak politician asking to stop Trade talks or the use of Tariffs to counter unfair Tariffs, I wonder, what can they be thinking? Are we just going to continue and let our farmers and country get ripped off? Lost $817 Billion on Trade last year. No weakness!"

That figure apparently refers to the US trade deficit in goods alone last year, which hit $810 billion last year, while the total deficit including services was $566 billion.

But more voices including in Trump's own Republican Party are coming out against his confrontational stance.

Republican Senator Ben Sasse, a frequent Trump critic, said the president's trade policies recalled a past of perilous economic instability.

"This administration's tariffs and bailouts aren't going to make America great again, they're just going to make it 1929 again," he said in a statement.

Republican House Speaker Paul Ryan sounded a more supportive note, however, saying that while he would prefer the administration use "better tools" to address unfair trade practices, the confrontation could also produce beneficial results.

"This friction that we're having, as long as it results in lowering barriers ... that's great."

Source: TRTWorld and agencies