EU-USA Trade Deal: A Mixed Bag for Europe

Strategic Insights -

The recent EU-USA trade deal has sparked controversy in Europe, with some viewing it as a loss for the EU and others seeing it as a gain for the UK. The deal, signed by EU President Ursula von der Leyden at Trump's Turnberry golf course, has been met with great discontent in France and Germany, with many criticizing the asymmetrical nature of the agreement. While the EU has managed to avoid worse-case tariffs, the deal still sees US tariffs on EU goods increasing to 15%, while EU tariffs on American goods remain minimal.

EU steel and aluminium will face high US tariffs, and Trump has quoted figures in excess of a trillion dollars for US energy supplies and armaments that the EU will be required to purchase. On the other hand, trade in aircraft and aircraft parts will remain tariff-free in both directions, which is a welcome outcome for Northern Ireland's aerospace sector.

Key Takeaways:

  • The EU-USA trade deal is seen as a mixed bag for Europe, with some viewing it as a loss for the EU and others seeing it as a gain for the UK.
  • The deal sees US tariffs on EU goods increase to 15%, while EU tariffs on American goods remain minimal.
  • EU steel and aluminium will face high US tariffs, with Trump quoting figures in excess of a trillion dollars for US energy supplies and armaments that the EU will be required to purchase.
  • Trade in aircraft and aircraft parts will remain tariff-free in both directions, a welcome outcome for Northern Ireland's aerospace sector.
  • The deal has been met with great discontent in France and Germany, with many criticizing the asymmetrical nature of the agreement.
  • The Irish Sea border continues to pose an obstacle to importing goods and materials from GB, despite the UK's lower tariffs.
  • The EU seems to think any tariffs on pharmaceuticals will be limited to the 15% rate but that may not be the American interpretation.
  • Ireland's pharmaceutical industry exports 58bn euros to the USA, making it crucial for the country that tariffs on pharmaceuticals remain minimal.
  • Studies predict massive losses to Irish output and employment if Trump applies substantial tariffs on pharmaceuticals.

Statistics:

  • 15% tariffs on EU goods from the US
  • 10% tariff rate facing the UK
  • 58bn euros worth of pharmaceutical exports from Ireland to the US in 2024
  • 20-30% potential loss of Irish employment due to pharma tariffs
  • 1.5% potential reduction in Irish national income in five years' time due to pharma tariffs

Sources:

  • https://www.thetimes.co.uk/article/eu-usa-trade-deal-urged-on-despite-fears-about-impact-on-ireland
  • https://www.rte.ie/news/business/2021/0618/1228558-eu-us-trade-deal-pharmaceuticals/
  • https://www.ibec.ie/en/getattachment/press-releases/press-release-new-ireland-export-market-behaviour-banana/Report-Export-Performance-Quarter-3-2021.pdf