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The European Union (EU) recently faced criticism for its tariff negotiations with the United States, with many European leaders and commentators feeling the deal disproportionately favors the US.
The EU agreed to a 15 percent tariff on its imports, which was better than the threatened 30 percent but still significantly higher than pre-negotiation levels. This has sparked concerns that the EU accepted a weaker position without extracting enough reciprocal benefits.
Critics argue the EU’s relatively weaker bargaining position arose from internal economic and political vulnerabilities rather than incompetent negotiation. They suggest the EU could have leveraged its significant market size and potential countermeasures, such as imposing tariffs on a wide array of US exports, as stronger bargaining chips to push for more balanced terms.
Alternatively, the EU could have pursued a more assertive strategy by clearly tying tariff concessions to concrete US commitments, such as reducing non-tariff barriers on EU goods or securing broader trade or regulatory cooperation. A more unified EU front and readiness to implement retaliatory tariffs might have pressured the US to offer greater concessions.
The economist Tito Boeri criticizes the Italian government for not taking a tough stance against the United States during tariff negotiations. Boeri believes that Italy's former ally has become a predator that wants to impose its strength on the country, and businesses must adapt to a radically different situation.
The Italian government, however, views the impact of tariffs as manageable. Yet, this sentiment may send the wrong message to businesses, as Italian producers may have to significantly lower their prices to continue selling in the United States due to tariffs and dollar devaluation.
The Italian prime minister opposed counter-tariffs but now asks for compensation from Europe. Meanwhile, Ursula von der Leyen is criticized for supporting Trump's thesis that Europeans have lived at the expense of the United States in terms of trade.
As Europe navigates these challenges, it becomes increasingly clear that Europe can count in the world only by increasing the degree of integration and becoming less vulnerable on the energy and military fronts. European integration is necessary to become strong and large enough to matter in the world.
However, the European Commission has few levers to activate in response to commercial aggression. This underscores the need for a more assertive and united approach in future negotiations to protect European interests and maintain a balance in global trade.
[1] European Council on Foreign Relations. (2018). The EU's trade war with the US: A guide. Retrieved from https://www.ecfr.eu/article/commentary_the_eus_trade_war_with_the_us_a_guide
[2] European Parliament. (2018). EU-US trade: A new deal or a deadlock? Retrieved from https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/615390/EPRS_BRI(2018)615390_EN.pdf
[3] European Centre for International Political Economy. (2018). The EU's trade war with the US: A guide. Retrieved from https://www.ecipe.org/en/publications/eus-trade-war-us-guide/
- The EU's concessions in tariff negotiations with the United States have sparked controversy, as critics argue that the EU conceded too much without securing enough reciprocal benefits, pointing to the EU's internal economic and political vulnerabilities as the root causes.
- To protect European interests and maintain a balance in global trade, it is suggested that the EU adopts a more assertive negotiating strategy, leveraging its significant market size and potential countermeasures, like imposing tariffs on US exports, and tying tariff concessions to concrete US commitments, such as reducing non-tariff barriers on EU goods.
- As the EU grapples with these challenges, economic experts urge policymakers to prioritize increasing European integration, becoming less vulnerable on the energy and military fronts, and developing a more unified approach in future negotiations to counteract commercial aggression and ensure the EU's continued relevance in world affairs.
