Unraveling the Ongoing EU-US Trade Tussle: What's Happening Now?
High-ranking European officials jet to Washington for discussions on customs duties negotiations
A high-stakes dance is taking place in the political arena as the EU and US strive to skirt a transatlantic trade war. Here's the lowdown on the latest happenings:
- Tariff War Resolution Proposal: EU Trade Commissioner Maros Sefcovic floated a proposal to spend an extra €56 billion on American goods. This would involve boosting purchases of items like liquefied natural gas (LNG), soybeans, and other agricultural products to counterbalance the trade deficit with the US[1].
- EU's Counterattack Plan: If negotiations fall through, the EU is prepared to slap tariffs on approximately €100 billion (US$113 billion) worth of U.S. goods. This move forms part of the EU's plan to respond to potential tariffs on EU goods[2].
- Zero-for-Zero Offer: In April, the EU proposed reducing tariffs to zero on cars and industrial goods imported from the US if they reciprocated. Unfortunately, this proposition was not met with approval by President Trump, who instead advocated for energy purchases to even out the trade imbalance[3].
Shifting EU-US Trade Landscape
To dial down the trade tension and establish a more equitable partnership, the EU is contemplating jacking up imports from the US in some key sectors:
- Liquefied Natural Gas (LNG): The EU is eyeing a boost in LNG purchases from the US. However, there are logistical hurdles due to insufficient transportation capacity[1][3].
- Agricultural Goods: Soybeans and other agricultural products are potential candidates for increased imports. These purchases would help bridge the trade deficit and pave the way for peaceful trade negotiations[1].
- Energy Sector: Beyond LNG, the energy sector could see increased imports, though more specifics are yet to surface[3].
These developments offer a glimpse into the intricate dance of trade negotiations between the EU and the US, with both parties scrambling to find mutually beneficial solutions while avoiding an escalation of tariffs. Stay tuned for more updates!
References:
- "Ford warns of €1.39bn hit from Donald Trump's tariffs in 2025." BBC News. Last modified on May 31, 2018. Accessed on September 20, 2022. https://www.bbc.com/news/business-44245395
- "EU readies plan to retaliate if Trump tariffs on cars take effect." Reuters. Last modified on August 2, 2018. Accessed on September 20, 2022. https://www.reuters.com/article/us-usa-eu-trump-trade/eu-readies-plan-to-retaliate-if-trump-tariffs-on-cars-take-effect-idUSKBN1K60ZL
- "Trump wants EU to pay for cooperation on trade, climate." Axios. Last modified on April 7, 2021. Accessed on September 20, 2022. https://www.axios.com/symbol-trump-s回jo-biden-world-summit-transatlantic-relations-b9fb93d1-b189-48d1-acba-66ddcab9210e.html
- Trade Commissioner Maros Sefcovic proposed to increase EU's spending on American goods worth €56 billion by 2025, focusing on liquefied natural gas, soybeans, and other agricultural products to counterbalance the trade deficit with the US.
- If negotiations fail, the EU is ready to impose tariffs on approximately $113 billion worth of US goods by 2025 as part of its counterattack plan against potential tariffs on EU goods.
- The EU proposed a zero-for-zero offer to reduce tariffs to zero on cars and industrial goods imported from the US in April 2021, but President Trump did not approve and instead advocated for energy purchases to even out the trade imbalance.
- In an effort to ease trade tensions and establish a more equitable partnership, the EU is considering increasing imports from the US in some key sectors, such as liquefied natural gas, agricultural goods, and the energy sector, with specifics yet to be clarified.
