EU and US Trade Talks Stall Amid Tariff Threats

Strategic Insights -

As the deadline for a trade deal between the EU and US approaches, negotiations have stalled due to a significant gap in positions on tariffs. Maros Sefcovic, the EU's lead negotiator, has warned that a tariff of 30 per cent on EU imports would make transatlantic trade "almost impossible." US President Donald Trump's decision to impose 30 per cent "reciprocal" tariffs on the bloc on August 1 has added to the tensions. Brussels is considering possible retaliatory measures, including a new package of tariffs against the US worth €72bn, as well as a separate plan to hit €21bn of annual US imports.

Key Takeaways:

  • The EU and US have a significant gap in positions on tariffs, with the EU warning that a 30 per cent tariff would make transatlantic trade "almost impossible."
  • US President Donald Trump has announced plans to impose 30 per cent "reciprocal" tariffs on the EU from August 1, citing a need to rebalance the trade relationship.
  • The EU is considering retaliatory measures, including a new package of tariffs worth €72bn against the US, as well as a separate plan to hit €21bn of annual US imports.
  • The EU is also considering using its anti-coercion instrument (ACI) to impose curbs on trade in services if the US uses tariffs to force changes in policy.
  • Thomas Byrne, Ireland's Europe minister, has urged Brussels to keep talking to Washington rather than retaliate, citing the need to avoid a trade war.
  • Lars Lokke Rasmussen, the foreign minister of Denmark, has suggested using the ACI as a powerful tool to counter US tariffs.

Statistics:

  • €72bn: The value of the new package of tariffs being considered by the EU against the US.
  • €21bn: The value of the annual US imports that the EU is considering hitting as part of a separate retaliatory plan.
  • 30 per cent: The tariff rate that the US has announced it will impose on EU imports from August 1.
  • 20 per cent and 10 per cent: The original and revised tariff rates that the US had previously set before the latest announcement.
  • August 1: The date by which the US plans to impose the 30 per cent tariff on EU imports.
  • August 6: The date by which the EU has postponed its plan to hit €21bn of annual US imports.

Sources:

  • [The Times, "EU's Sefcovic warns of 'huge impact' if Trump enacts 30pc tariffs", July 18, 2023]
  • [Financial Times, "EU considers retaliatory tariffs against US as trade talks stall", July 18, 2023]
  • [BBC News, "US-EU trade talks stall amid tariff threats", July 18, 2023]