In light of potential Trump tariffs, EU trade could face serious challenges
The European Union (EU) is maintaining a cautious yet engaged stance in its trade negotiations with the United States, following President Trump's renewed tariff threat. The EU is emphasising the need for fairness, quota limits on tariffs, and the resolution of longstanding disputes.
Denmark's foreign minister, Lars Lokke Rasmussen, has called for a firmer approach in the negotiations, while France's Trade Minister, Laurent Saint-Martin, has suggested no taboos in any retaliatory plans. If the 30% tariffs go ahead, another set of reprisal measures will be presented to trade ministers on Monday.
The EU appears more focused on balancing the trade terms and ensuring that the tariff regime does not disproportionately harm European producers. The European Commission has proposed a specific quota system based on "historic levels" of steel and aluminium exports, allowing EU exports to benefit from lower tariff rates up to a limit, after which a 50% tariff applies.
However, there is some conflicting messaging between the EU and US regarding the exact scope and technical quotas of the deal. The EU is still clarifying technical details, particularly how quotas for steel and aluminum exports will be implemented, emphasising a fair system to protect European interests.
The EU has prepared a list of tariffs worth €21 billion ($24.5 billion) on US goods if no deal is reached. German Chancellor Friedrich Merz has stated that he will work intensively for a deal before the August 1 deadline, and if no deal is reached, Germany's export economy could be significantly impacted.
EU trade chief Maros Sefcovic, representing the EU's 27 member states during ongoing trade talks with the US, mentioned that a 30% tariff on imports from the EU by the US would make it nearly impossible to continue trade, which is currently worth €4.4 billion ($5.15 billion) per day. Sefcovic and his negotiating team felt they were very close to an agreement during the trade talks with the US, but the latest tariff threat from Trump has upended negotiations with Mexico and the EU.
Sefcovic has noted that the current uncertainty caused by unjustified tariffs cannot persist indefinitely, and well-considered, proportionate countermeasures would still be on the table if no deal could be reached. Italian Foreign Minister Antonio Tajani has threatened stark consequences in the event of a failure to reach a deal, while Laurent Saint-Martin has stated that the situation requires a change in strategy due to Trump's latest announcement.
European Commission President Ursula von der Leyen delayed a package of retaliatory measures over previous US tariffs on steel and aluminium. The bloc is prepared for all outcomes in the trade negotiations with the US, and the new retaliatory measures will be discussed by trade ministers on Monday.
This stance reflects a pragmatic approach by the EU to manage trade tensions with the US, safeguarding European economic interests while maintaining dialogue to avoid escalation. The EU aims to negotiate on non-tariff barriers such as agricultural and digital trade issues in parallel with tariff discussions.
- The European Commission, representing the EU's 27 member states, has prepared a list of tariffs worth €21 billion to counter any potential trade disputes with the United States.
- Italian Foreign Minister Antonio Tajani has threatened stark consequences in the event of a failure to reach a trade agreement between the EU and US, while France's Trade Minister, Laurent Saint-Martin, has stated that the situation requires a change in strategy due to President Trump's latest tariff threat.
- The EU aims to negotiate on non-tariff barriers such as agricultural and digital trade issues in parallel with tariff discussions, emphasizing a pragmatic approach to manage trade tensions with the US while safeguarding European economic interests.
