Germany will offer to scrap the EU’s 10% tax on US autos: Report

German auto makers are proposing an end to the European Union’s 10 percent import tax on U.S.-made cars, the Wall Street Journal reported Wednesday.

The newspaper reported that Richard Grenell, the U.S. ambassador to Germany, has been in talks recently with the chief executives of German car makers BMW, Volkswagen and Daimler, where they pitched the idea of ending car tariffs between the U.S. and the EU.

During these talks, the executives said they would be in favor of scrapping these levies as part of a broader deal encompassing industrial goods, the Journal said.

There is a catch, however. Europe also wants a 25 percent tax on imported pickup trucks, SUVs and big vans scrapped, according to the report. That tax has been in place since the Johnson administration and scrapping it could alienate U.S. auto workers, a key constituency for President Donald Trump.

The report comes shortly after the European Commission said the EU will slap a 25 percent charge on $3.2 billion worth of U.S. goods, including bourbon and motorbikes, as retaliation for levies implemented on European steel and aluminum products by the U.S.

Trade tensions between the U.S. and some of its key partners has been escalating recently, increasing fears of a full-blown trade war. These tensions weighed on financial markets on Tuesday, with the Dow Jones industrial average posting on Tuesday its longest losing streak in more than a year.

Click here for the full Journal report.

This story is developing. Please check back for updates.