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Trump Threatens Action on WTO After Reports He Wants to Withdraw

By Jeff Mason and Jan Strupczewski

WASHINGTON/BRUSSELS, July 2 (Reuters) - U.S. President Donald Trump warned the World Trade Organization on Monday that "we'll be doing something" if the United States is not treated properly, just hours after the European Union said that U.S. automotive tariffs would hurt its own vehicle industry and prompt retaliation.

Trump, speaking to reporters during a meeting with Dutch Prime Minister Mark Rutte at the White House, said, "The WTO has treated the United States very, very badly and I hope they change their ways."

His comments came after the Axios news website reported that Trump's administration has drafted proposed legislation that would allow Trump to raise tariffs at will and negotiate special tariff rates with specific countries -- two basic violations of WTO rules.

The United States has "a big disadvantage with the WTO. And we're not planning anything now, but if they don't treat us properly, we'll be doing something," Trump said, without elaborating.

Last week, a source familiar with Trump's thinking told Reuters that the president has privately expressed a desire to quit the WTO, but that it was not a serious proposal.

Trump also during his meeting with Rutte said that his administration would be meeting with EU officials to "work something out" on trade. The United States has imposed tariffs on European steel and aluminum imports and is conducting another national security study that could lead to tariffs on autos and auto parts.

"I think the E.U. -- we're going to be meeting with them fairly soon, Trump said. "They want to see if they can work something out, and that'll be good, and if we do work it out, that'll be positive, and if we don't, it'll be positive also, because we'll just think about those cars that pour in here, and we'll do something, right?"

The EU on Friday submitted comments warning the U.S. Commerce Department that U.S. import tariffs on cars and car parts were unjustifiable and would harm America's automotive industry and likely lead to counter-measures by its trading partners on $294 billion of U.S. exports.

The Commerce Department launched its investigation, on grounds of national security, on May 23 under orders from Trump, who has frequently complained about the EU's 10 percent car tariff being four times that of the United States, apart from the 25 percent U.S. levy on pickup trucks.

Trump said last week that the government would complete its study soon and suggested the United States would take action, having earlier threatened to impose a 20 percent tariff on all EU-assembled cars.

The European Commission, the EU executive body that handles trade for the bloc, said on Monday it was trying to convince its U.S. counterparts that imposing such tariffs would be a mistake.

"We'll spare no effort, be it at the technical or political level, to prevent this from happening," a spokesman for the commission told reporters, adding that commission President Jean-Claude Juncker's trip to Washington later this month would seek to stop any new U.S. tariffs.

The EU exported 37.4 billion euros ($43.6 billion) of cars to the United States in 2017, while 6.2 billion euros worth of cars went the other way.

In its submission, the EU said EU companies make close to 2.9 million cars in the United States, supporting 120,000 jobs - or 420,000 if car dealerships and car parts retailers are included.

Imports had not shown a dramatic increase in recent years, it said, and had grown largely alongside overall expansion of the U.S. car market, with increased demand that could not be met by domestic production.

The submission said that tariffs on cars and car parts could undermine U.S. auto production by imposing higher costs on U.S. manufacturers. The EU calculated that a 25 percent tariff would have an initial $13 billion-$14 billion negative impact on U.S. gross domestic product with no improvement to the country's current account balance

Assuming counter-measures along the lines of those taken in response to existing U.S. import tariffs on steel and aluminum, up to $294 billion of U.S. exports - 19 percent of overall U.S. exports - could be affected, the submission said.

The submission also said that the link between the automotive industry and national security was "weak." Military vehicles, such as the Humvee, were made by different, more niche producers. ($1 = 0.8582 euros)

(Reporting by Jan Strupczewski and Jeff Mason Additional reporting by David Lawder Writing by Philip Blenkinsop and Robert-Jan Bartunek' Editing by Alison Williams and Leslie Adler)

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