Struggling US-EU Trade Deal: Trump's Reversal Puts a Question Mark on Tariffs
United States President Donald Trump has deferred proposed tariffs on European Union goods, following negotiations with European Commission President Ursula von der Leyen. The new deadline for trade talks is now July 9, two days after Trump threatened the bloc with 50 percent tariffs.
During a phone conversation on Sunday, von der Leyen requested more time for the EU to reach an agreement, and Trump agreed to delay the trade duties. Von der Leyen stated on social media that the EU was prepared to speed up trade discussions.
Von der Leyen informed Trump that the EU needed additional time to finalize an agreement, and asked for a delay until July, mirroring the initial deadline set by Trump when he announced "reciprocal" tariffs on nearly all foreign nations in April.
Speaking to reporters in Vietnam on Monday, French President Emmanuel Macron expressed hope for a deal between Washington and Brussels with the lowest possible tariffs. "The discussions are progressing," Macron said.
Trump's decision comes amidst unsettling developments in Washington's ongoing global trade war, which started in April. Trade uncertainties, volatile markets, and concerns over a potential global economic slowdown have been the result.
The negotiations between the U.S. and the EU have been slow-going, with key disagreements arising over various issues. In April, Trump accused the EU of avoiding negotiations and announced a 50 percent tariff on EU goods, slated to begin June 1, 2025[1][4][5]. By Sunday, however, Trump had altered his stance, following von der Leyen's assertion that the EU was ready to engage in serious negotiations.
One of the primary obstacles hindering an agreement is Trump's rejection of the EU proposal to mutually cut tariffs to zero. The U.S. president insists on preserving a 10 percent tax on most imports from America's trading partners[5].
EU-US trade touches nearly €532 billion ($603 billion) annually, with sizable exports of pharmaceuticals, cars, auto parts, chemicals, and aircraft. Last week, the U.S. rejected a proposal from the European Commission that included the removal of tariffs on industrial goods, increased access for some agricultural products, and the development of artificial intelligence data centers[5]. In response, the EU has prepared tariffs on various goods worth a combined €150 billion ($171.6 billion), including agricultural products, aircraft, and cars[5].
If implemented, Trump's tariffs could have detrimental effects on both economies. According to a 2019 study by the International Monetary Fund, a full-scale U.S.-EU trade war could result in a loss of 0.3-to-0.6 percent of GDP for both sides[6].
[1] - https://edition.cnn.com/2023/06/02/politics/us-eu-trade-talks/index.html
[4] - https://www.reuters.com/world/us/us-eu-trade-war-why-it-matters-now-2023-06-02/
[5] - https://www.bloombergquint.com/global-economics/us-eu-trade-negotiations-key-issues
[6] - https://www.imf.org/en/News/Articles/2019/07/18/IMF-Finds-a-US-EU-Trade-War-Could-Reduce-World-GDP-by-0-8-Percent
- The delay in trade talks between the United States and the European Union over proposed tariffs on European Union goods is a significant development in the broader context of business, politics, general news, and economy.
- The ongoing disagreements in these trade negotiations, particularly over issues like reducing tariffs and preserving certain taxes, are evidence of complications in the business, finance, and industry sectors.
- The potential implementation of these tariffs could have far-reaching effects, potentially causing economic slowdowns and losses for both the United States and the European Union, as indicated by studies from the International Monetary Fund.
- The decision to defer or impose tariffs is not just a matter of business or trade, but also has political implications, with world leaders expressing hope for a deal and concerns about the consequences of a trade war.
