US President Donald Trump has moved to avoid an immediate collision with the EU and Japan on trade by deferring a move to impose tariffs on imported automotive products by six months, according to people familiar with the matter. 

The decision by the Trump administration is merely a reprieve for officials in Brussels and Tokyo — who would be most affected by the action — since the threat of levies from Washington will remain on the table for most of 2019. 

Mr Trump and top officials made the decision ahead of a Saturday deadline to take action following a report delivered in February to the White House from the commerce department, which outlined the national security risk posed by foreign vehicles and automotive components. 

Most industry lobbyists were expecting Mr Trump to delay the imposition of auto tariffs, or to announce and then suspend them, in order to avoid blowing up trade relations with the EU and Japan at the same time as the US escalated its trade dispute with China. 

The decision to opt for a six-month delay, following a meeting of US trade and economic officials on Tuesday, was first reported by Bloomberg News. 

Shares in US and European automakers and suppliers raced higher after the report. The Stoxx 600 automobile and parts index was up 1.8 per cent, reversing a 2.1 per cent decline seen earlier. Porsche and Mercedes-Benz owner Daimler, up 3.3 per cent and 2.4 per cent respectively, saw some of the largest gains.

General Motors, Ford and US-listed shares of Fiat Chrysler all erased their losses to trade higher. The S&P 1500 Composite auto manufacturers index was up 0.8 per cent.

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