Zero Hedge

Shortly ahead of when European Commission President Jean-Claude Juncker and the EU’s trade chief Cecilia Malmstrom are set to meet with President Donald Trump at the White House, scheduled for 1:30pm ET, Reuters reports “the European Commission is drawing up a list of $20 billion of U.S. goods to hit with duties if Washington imposes tariffs on imported cars.”

Malmstrom made the announcement soon after arriving in Washington, in an early Wednesday interview telling Swedish newspaper Dagens Nyheter“We hope that it doesn’t come to that and that we can find a solution. If not, the EU Commission is preparing a rather long list of many American goods. It would be around $20 billion.”

There’s little that’s expected from the meeting, where it appears the European side has set the bar low at simply damage control  attempting to de-escalate and in one European official’s words “de-dramatize” what’s been a quickly escalating tit-for-tat trans-Atlantic trade crisis.

Jean-Claude Juncker and Cecilia Malmström, Image via Euranet Plus

In their last minute floating of a $20 billion list to the media of what Malmstrom described as “more general goods such as agricultural products, machinery, high-tech products and other things,” the European Commision appears fully aware they are dealing with a US president that likes to negotiate from the extremes and move in from a more powerful and threatening position.

While the European side has emphasized Wednesday’s White House visit is in the spirit of “dialogue” and not negotiation, it’s tried lay down its own extreme scenario of how far Europe is willing to go:

The Commission briefed EU countries last week on the bloc’s possible response, saying in theory it could hit 9 billion euros of U.S. goods, according to EU sources.

However, some EU diplomats said the Commission was also looking at going for double that amount – to the level Malmstrom is suggesting – at half the duty rate.

A formal proposal toward that end could come as early as late August or early September as that’s possibly how early the US Commerce Department might complete its investigation into whether car imports threaten national security, a significant determining factor in whether or not Trump will follow through on his tough talk on European car import tariffs.

Previously Malmstrom indicated the pair would attempt to persuade Trump against his threat of raising tariffs on European car imports, which European officials say would wreck a $1 trillion trade relationship, disastrous for both sides of the Atlantic and with 15 million jobs on the line.

She told the Swedish newspaper in her Wednesday morning statements, “Basically, I’m an optimistic person, but heading in to this I’m moderately optimistic. But one must always try.”

Meanwhile, though downplaying the possibility that Juncker is in Washington to offer any new or significant deal on trade, Reuters reports further, “EU budget commissioner Guenther Oettinger suggested the EU would be ready to discuss mutual tariff cuts provided the Washington lifts punitive metals tariffs first.” Oettinger said in media statements that “the two could try to forge a lighter version of the planned U.S.-European trade deal known as the Transatlantic Trade and Investment Partnership (TTIP)” — which were stalled after Trump’s 2016 election victory.

Perhaps more optimistic, Trump on Tuesday Trump tweeted that the EU was coming to negotiate a trade deal: “I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!” Trump wrote.

And hours ahead of their arrival, Trump characteristically unleashed more in response to Malmstrom’s early morning comments: “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!”

Further, the president wrote“When you have people snipping at your heels during a negotiation, it will only take longer to make a deal, and the deal will never be as good as it could have been with unity. Negotiations are going really well, be cool. The end result will be worth it!”

Malmstrom indicated she was not expecting a breakthrough, though at this point as Trump ends his twitter rant with “really…cool” negotiations, any wild and unexpected scenario is surely within the realm of possibility.