EU halts reprisal taxes following successful conclusion of US trade accord
The European Union and the United States have reached a significant trade deal that avoids a full-blown trade war, which was originally threatened by planned 30% tariffs from the US on EU products and retaliatory EU tariffs of €93 billion on US goods.
The agreement, reached on July 27 by EU Commission President Ursula von der Leyen and US President Donald Trump, sets a 15% tariff ceiling on most EU exports to the US, including cars, semiconductors, and pharmaceuticals. However, steel and aluminum remain subject to a 50% tariff, with quota-based relief options available.
Key details of the deal include EU commitments to purchase $750 billion worth of US energy products, notably liquefied natural gas (LNG), over the next three years. The EU also agreed to invest $600 billion in the US economy, although specifics around this are less detailed.
The deal also includes the elimination of tariffs on certain strategic industrial goods and enhanced market access for some US agricultural and fisheries products via existing tariff-rate quota (TRQ) systems.
However, the agreement has faced criticism from some European leaders who are concerned that the terms may harm EU competitiveness, as the tariffs, though lower than initially threatened, still raise costs for European exporters to the US.
The deal is still being worked out, with more details expected "very, very soon". The European Commission has suspended the implementation of these tariffs for a period of six months, but they can be reversed if necessary, as the measures have been "frozen".
The US has gone ahead with new tariffs, despite the EU suspending its measures. The US order does not include exemptions for cars and car parts, or aircraft and related equipment. EU officials anticipate more executive orders from Washington to follow soon.
The tariffs targeted by the European Commission were a response to US subsidies for Boeing, while the tariffs targeted by the US were a response to EU subsidies for Airbus. The value of the EU's countermeasures package, as approved by member states, remains at €72 billion.
The tariffs aimed at US exports, including soybeans, cars, aircraft, and whisky, were due to begin on August 7. Gill, an EU official, stated that the agreement provides some short-term stability for EU companies exporting to the US. The EU continues to work with the US to finalise a joint statement, as agreed on July 27.
The value of the merged countermeasures package, as prepared by the European Commission on July 24, is not specified. On July 31, Trump signed an executive order imposing 15% duties on most EU imports, with the deadline set for August 8.
In conclusion, the agreement represents a compromise that defuses the imminent tariff conflict but tilts somewhat in favor of US trade and energy interests, maintaining an unpredictable but less confrontational transatlantic trade relationship.
- The recent trade deal between the European Union and the United States, though mitigating the threat of a full-blown trade war, has drawn criticism from some European leaders due to the potential negative impact on EU competitiveness.
- International politics surrounding the trade deal between the EU and US have led to commitments from the EU to purchase $750 billion of US energy products over the next three years and invest $600 billion in the US economy, as part of the agreement's terms.
