US Threatens 17% Tariffs on EU Agricultural Exports in Escalating Trade Dispute

Strategic Insights -

The United States has threatened to impose 17% tariffs on European Union agricultural exports, escalating the ongoing trade conflict with Brussels. The move, announced ahead of a July 9 deadline for a deal between the two trading giants, has been met with skepticism by EU officials, who had been expecting the US to hold duties at the baseline rate. The US President Donald Trump has demanded wide-ranging exemptions from regulations and a reduction in the EU's trade surplus with the US, which Brussels has rejected. The focus of the talks has shifted to carve-outs, with the EU seeking exclusions for certain goods, including aircraft parts and spirits.

Key Takeaways:

  • The US has threatened to impose 17% tariffs on EU agricultural exports, which would be in addition to the 10% "reciprocal" tariff on EU imports.
  • The move has been characterized by EU officials as an escalation of the transatlantic dispute.
  • The focus in the talks has shifted to carve-outs, with the EU seeking exclusions for certain goods, including aircraft parts and spirits.
  • EU countries are divided between accepting some higher tariffs in return for a period of certainty and those who wish to retaliate to put pressure on the US to compromise.
  • The US has paused the imposition of a 10% "reciprocal" tariff on EU imports, which had been due to go on top of a 10% baseline in operation since April.
  • EU agrifood exports to the US, including products such as wine, totalled €48bn last year.
  • The EU trade commissioner, Maros Sefcovic, was warned of the proposed 17% duties on agrifood on Thursday during meetings in Washington.
  • Several ambassadors intervened in the meeting to press for stronger action against Washington, according to two people briefed on the meeting.
  • The US has sketched out three scenarios for July 9: an "agreement in principle" would keep the 10% tariffs, with possible further tariff relief at a later stage; countries that failed to reach such an agreement would have tariffs return to the level announced in April; and higher tariffs would be applied to countries that the US believes are not negotiating in good faith.

Statistics:

  • EU agrifood exports to the US totalled €48bn last year.
  • The EU has assembled a package of counter-tariffs worth €21bn on annual US exports, starting from July 14.
  • A further €95bn package of counter-tariffs is being assembled by the commission, including aircraft and food.

Sources:

  • Three people briefed on the discussions
  • EU officials
  • Ursula von der Leyen, European Commission president
  • Maros Sefcovic, EU trade commissioner
  • Friedrich Merz, chancellor of Germany
  • Two EU diplomats
  • A commission spokesperson
  • The White House (no response to a request for comment)