A confidential US Commerce Department report clears the way for the White House to evoke a “national security threat under section 232 of a 1962 trade law, a provision that allows tariffs on items that threaten national security, and which allows the US to impose a 25% tariff in auto parts and cars.

The move, if signed by US President Donald J. Trump, is expected to severely impact European exporters, particularly Germany.

Upon receiving the report on February 17, Trump has 90 days to decide whether to impose the import duties. In November 2018, the White House called for a 25% import duty on imported cars, following major layoffs at General Motors.

To avoid a trade war, Germany’s Economy Minister Peter Altmaier favoured the reduction of import tariffs for cars to “zero per cent” both in the US and Europe.

The European Commission submitted its draft negotiating mandates to the Council for approval on January 18. The European Parliament’s Trade Committee approved the European Commission’s mandate to begin limited EU-US trade talks by a vote of 21 to 17.

The mandate allows the Commission to negotiate on car tariffs. However, the committee did set preconditions that appear to be a case of overreach if the Commission hopes to conclude a deal. The US must first lift all tariffs on aluminium and steel and agree that agriculture will not be included on the negotiating agenda.

The European Commission recently blacklisted 23 territories outside the bloc for money laundering, which included US overseas territories Guam, American Samoa, the US Virgin Islands, and Puerto Rico. Brussels now worried that this move may further complicate trade negotiations with the US

In practical terms, blacklisting means European lenders are obliged to carry out additional checks when dealing with their counterparts in the territories that have been listed. The blacklist has yet to be ratified by the European Parliament, but a vote has been scheduled for March 12.