Let's Talk Tariffs: EU's Methodical Game Plan With the States, Navigating Negotiations and Gradual Countermeasures
EU proposes boosting US product purchases by €50 billion to bypass Trump's tariffs
TheOld World is eyeing a boost in its trade with the United States by a whopping €50 billion, as revealed by Maros Sefcovic, EU's Commissioner for Trade, in a sit down with The Financial Times on May 1st. Why, you ask? To alleviate the "snag" in its economic palaver with Washington.
The European Union is currently tussling it out with the American administration to slash the tariffs levied by the former leader of the free world, The Donald. The tariffs of 25% on cars, aluminum, and steel, along with a 10% tariff on all other imports, have already been implemented. Donald Trump accuses Euro-land of nurturing an outrageous trade deficit with the US, estimating it to be in the billions. However, the European Union claims this deficit is only €50 billion when you factor in services.
When asked if he would accept a 10% duty as a starting point in trade negotiations, Maros Sefcovic was quick to declare it a "pretty steep figure", hinting that the EU would pass on any deal that keeps tariffs at this rate. As if that wasn't enough, he added that it will be "quite the challenge" to strike a deal that "is clearly advantageous and acceptably comfortable for our member states and our European Parliament".
EU's Trade Strategy: The Art of War
The EU is aggressively engaged in negotiations with the current administration to have those tariffs lifted, but the White House seems less than willing to cave in. A potential compromise may be the establishment of a joint duty-free goods list, perhaps initiating with motor vehicles. This arrangement is appealing as EU tariffs on US cars currently far exceed US tariffs on EU automobiles.
However, Oval Office One lacks the power to unilaterally slash tariffs, given that the relevant trade negotiation authority lapsed in 2021.
EU Counteroffensives: Suspended Hostilities
The EU has prepared countermeasures for the imposed tariffs, including 10% and 25% additional duties on various products. However, these measures are currently on hold, which suggests there is continued dialogue or a willingness to resolve these trade disputes without further thawing relations.
The State of Play: A Loveless Partnership
- Free Love Agreement: Despite each other being each other's biggest trade and investment partners, there's no dedicated free trade agreement between the EU and the US. The Transatlantic Trade and Investment Partnership (TTIP) conversations screeched to a halt in 2016.
- EU-US Trade and Technology Council (TTC): The TTC was formed in 2021 to strengthen transatlantic trade and economic relations. It serves as a platform for synchronizing perspectives on global trade and technology issues.
The Future of Tariff Removal and Increased Purchases
Any prospect of tariff removal remains uncertain due to the lack of presidential power to unilaterally roll back tariffs and differing opinions on the scope of tariff reductions. Any increase in EU purchases of American products would likely hinge on securing more favorable trade terms, such as reduced tariffs, which currently continue to be a topic of negotiation.
Overall, although there's lots of discussion and some potential for accord, significant progress on tariff reduction and increased purchases appears tricky without a more substantial agreement or alteration in trade negotiation powers.
- The European Union cautiously navigates negotiations with the current administration to have the imposed tariffs by former President Donald Trump, such as 25% on cars, aluminum, and steel, removed.
- Maros Sefcovic, the EU's Commissioner for Trade, expressed concern about accepting a 10% duty as a starting point in trade negotiations, hinting at the EU's preference for a more gradual approach to tariff reductions.
- On Thursday, the future financial health of businesses and the state of politics, particularly general-news, is heavily contingent on the outcome of these negotiations between the European Union and the United States.
- The European Union has readied countermeasures consisting of additional tariffs on various products, but these have temporarily been suspended, signifying a willingness to avoid further escalation in the trade standoff.
- The EU and the United States, despite being each other's largest trade and investment partners, have yet to establish a dedicated free trade agreement, complicating the process of removing tariffs and increasing purchases between the two economic powerhouses.
