October 16, 2019 / 4:58 PM / a month ago

UPDATE 4-Trump upbeat on trade talks with EU, hints at reprieve for some duties on Italian products

* U.S. tariffs on up to $7.5 bln of EU imports to hit Oct. 18

* Trump says U.S. will try to avert tariffs in broader trade fight

* Suggests some Italian goods may be exempted from upcoming duties

* Trade groups, businesses seek technical exemptions

* Mnuchin says EU tariffs "not the focus" (Adds comments from Mnuchin)

By Alexandra Alper and Andrea Shalal

WASHINGTON, Oct 16 (Reuters) - U.S. President Donald Trump on Wednesday said Washington was in talks with "some new people" in Europe about trade issues and he hoped the discussions would be successful, as Italy's president urged Trump to avoid counterproductive tariffs.

Italian President Sergio Mattarella told reporters ahead of a meeting with Trump at the White House that he hoped the two allies could cooperate on trade issues and avoid retaliatory tariffs.

The meeting came two days before Washington is slated to impose tariffs on up to $7.5 billion of imports of EU goods, including many Italian cheeses, following the World Trade Organization's green light for the move over subsidies to planemaker Airbus.

The EU is also bracing for a Nov. 14 deadline when the Trump administration must decide whether to impose threatened U.S. national security tariffs of as much as 25% on vehicles and parts that have already been delayed once by six months.

Trump said Rome backed efforts by Washington and Brussels to reach a broader trade deal that could stave off more tariffs. He waded into potentially controversial territory by suggesting Italy could boost its bilateral trade with the United States if it were unshackled from EU rules that ban such deals.

"Without the burdens, as unfair as they are, imposed by the European Union, we would actually have a much higher number than $70 billion between Italy and the United States," Trump said at a news conference with Mattarella.

Trump also dangled the prospect of some tariff relief for Rome, whose cheese and wine imports were hit hard on the list of goods facing 25% higher duties on Friday.

"We're talking to the president about that as it pertains to Italy," Trump said. "He thought we were a little bit harsh on Italy and we don't want to be harsh on Italy. We'll never do that. So we'll look at that very strongly."

The U.S. Trade Representative's office did not comment on possible exemptions for Italy, but noted its initial statement on the EU tariffs had left the door open to raising the duties at any time or changing the products affected.

More than 80 trade groups and businesses, including the American Cheese Society and the Distilled Spirits Council of the United States, this week wrote to U.S. Trade Representative Robert Lighthizer urging technical exemptions for any goods shipped before Oct. 2, the date the tariffs on EU goods were announced. Many of those shipments will arrive after Friday.

USTR made a similar accommodation for Chinese goods affected by tariffs earlier this year. It did not comment on the letter.

Trump said Washington aimed to avoid broader tariffs for now. "I could solve the problem instantly but it would be too harsh. It would involve tariffs on European products coming into this country and for right now we're going to try to do it without that," he said.

U.S. Treasury Secretary Steven Mnuchin also struck an upbeat tone, telling reporters the Airbus case was a "specific situation," but imposing broader tariffs against the EU was "not the focus at the moment."

He said Washington's top priorities were finalizing a trade agreement with China and ensuring congressional passage of a U.S.-Mexico-Canada trade deal, omitting mention of Europe.

He also lauded increased investment by European carmakers in U.S. production facilities, hitting a key goal of the Trump administration.

U.S. officials have said they prefer a negotiated solution to end the dispute over aircraft launch aid, but insist Brussels must agree to permanently end subsidies to Airbus.

The WTO has found that Airbus and its U.S. rival Boeing received billions of dollars of illegal subsidies in a pair of cases that have run for 15 years. An adjudication in the Boeing case is expected early in 2020, which will pave the way for the EU to impose tariffs on U.S. goods.

For now, Washington has said it will impose 10% tariffs on Airbus planes and 25% duties on a range of products, including Italian cheese, French wine, Scotch whiskies and other products from across the continent.

Trump said he did not expect the EU to retaliate against those moves since the U.S. tariffs had been cleared by the WTO.

"In theory, there can't be a retaliation because...this was an award that we got for the unfair treatment given to the United States by the European Union," the U.S. president said. "This was getting us even." (Additional reporting by Steve Holland, Makini Brice and David Shephardson; Writing by Andrea Shalal and Susan Heavey Editing Chizu Nomiyama, Alistair Bell & Shri Navaratnam)

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