EU Designs Trade Retaliation Against US to Be Quickly Imposed

Strategic Insights -

The European Union has prepared its threatened trade retaliation against the US to be swiftly applied in the future. Member states voted for tariffs of up to 30% on $107 billion worth of US imports to the EU, targeting products including Boeing aircraft, jeans, chicken, and soybeans. The bloc's retaliatory measures can be activated quickly if the US fails to stick to agreed terms. Diplomats indicated that they would not hesitate to use all available tools to ensure that a negotiated outcome is upheld.

Key Takeaways:

  • The EU's retaliatory tariffs of up to 30% on $107 billion worth of US imports to the EU will take effect on August 7.
  • The tariffs will target products including Boeing aircraft, jeans, chicken, and soybeans, as well as EU scrap metal.
  • A deal between the EU and the US is expected by August 1, which could waive tariffs on some products, including aircraft, spirits, and medical devices.
  • The EU's top priority is a reduction in levies on EU cars, which are currently subject to tariffs of 27.5%.
  • US President Donald Trump has been imposing an extra 10% tariff on EU goods exported to the US since April, in addition to existing duties averaging 1.6%.
  • The EU is concerned that Trump could impose higher tariffs on other sensitive products in the future, including pharmaceuticals and lumber.

Statistics:

  • $107 billion: the value of US imports to the EU that will be subject to retaliatory tariffs.
  • 30%: the maximum tariff rate that the EU will impose on US imports to the EU.
  • 15%: the "reciprocal" tariff rate that the EU and the US are negotiating as part of a framework agreement.
  • 27.5%: the tariff rate currently applied to EU cars exported to the US.
  • 10%: the extra tariff rate imposed by Trump on EU goods exported to the US since April.
  • 1.6%: the average tariff rate on a trade-weighted basis applied to EU goods exported to the US before Trump's 10% tariff.

Sources:

  • ANDY BOUNDS -- BRUSSELS The EU has designed its threatened trade retaliation against the US to be rapidly applied at any point in the future (Financial Times)
  • Diplomats told the Financial Times that the EU's retaliatory measures can be activated quickly if the US fails to stick to agreed terms (Financial Times)
  • The European Commission said it "could not speculate" on whether the retaliatory tariffs would be used (Financial Times)
  • Trump has been imposing an extra 10% tariff on EU goods exported to the US since April (Financial Times)
  • The EU's top priority is a reduction in levies on EU cars, which are currently subject to tariffs of 27.5% (Financial Times)