Tariff Conflict between EU and US: Week of Potential Resolutions? - Week of verdict approaches for customs confrontation between EU and USA
The ongoing tariff dispute between the European Union (EU) and the United States (US) is reaching a crucial week, with key figures from both sides expressing differing opinions on how to approach the issue.
The tariff policy of US President Donald Trump is primarily aimed at correcting trade imbalances and encouraging more production in the US. However, his plans to send around twelve letters regarding tariffs to various countries, including EU countries, have created uncertainty about the future of the dispute. While the exact contents of these letters are yet to be revealed, it is expected that Trump will provide more information about them on Monday.
In the EU, the opinions of Friedrich Merz, the Federal Chancellor of Germany, and Bernd Lange, the chairman of the Committee on International Trade in the European Parliament, do not align. Merz has called for a quick resolution to the tariff dispute, believing that it is about resolving a tariff dispute, not negotiating a comprehensive trade agreement with the US. On the other hand, Lange advocates for caution, suggesting that rushing into a deal could be detrimental. He is against entering into a deal for the sake of a deal.
The tariff dispute remains a crucial issue for the EU member states, who view the risk of an escalating trade war as more serious than potentially higher tariffs. However, the outcome of the negotiations between the EU and the US is uncertain. From July 9, additional tariffs on EU imports may be implemented if EU trade demands are not met, according to Trump's earlier statements.
The potential deal suggests that special regulations would need to be agreed upon for individual sectors, such as automotive, pharmaceuticals, chemicals, steel, and aluminum. For steel and aluminum, the EU has planned 25% ad valorem tariffs, which target specific goods listed in EU implementing regulations. Similarly, threatened U.S. tariffs on European goods, including automotive products, could reach up to 10% or more.
The economic risk of the tariff dispute is significant. Estimates suggest that if the dispute persists, the EU could face a GDP loss of 0.3%, while the US could face a loss of 0.7%. Both sides are keen to avoid such economic damage, and ongoing talks between the US and the EU are aimed at preventing full tariff imposition and minimizing economic damage.
In light of these developments, it is clear that the proposed EU-US tariff deal involves complex regulations and timing regarding tariffs on various goods, with particular impact on the automotive, steel, and aluminum industries. While no fully detailed public text of a final EU-US tariff "deal" is available at this time, the current framework involves delayed and phased 25% EU tariffs on US steel and aluminum imports, and threatened US tariffs on European goods, including automotive products. These measures are codified in EU regulations specifying product lists and timing, with ongoing negotiation aimed at preventing full tariff imposition and minimizing economic damage.
References: [1] European Commission. (2021). EU tariffs on US steel and aluminum. Retrieved from https://ec.europa.eu/info/business-economy-euro/trade-and-single-market/trade-relations/trade-policy-research/eu-tariffs-us-steel-aluminium_en [2] International Monetary Fund. (2018). Macroeconomic implications of proposed tariffs on U.S. trade partners. Retrieved from https://www.imf.org/en/Publications/WP/Issues/2018/12/27/Macroeconomic-Implications-of-Proposed-Tariffs-on-US-Trade-Partners-47210
- The ongoing tariff dispute between the EU and US, heavily influenced by policy decisions, particularly the employment and industry policies of both Presidents Trump and Merz, carries significant financial implications for both sides, as suggested by statistics from the International Monetary Fund.
- The EU's employment policy, as represented by Bernd Lange, advocates for caution in approaching the tariff dispute, fearing that rushing into a deal could be detrimental, given the complex regulations and timing involved in tariffs on various goods, especially the automotive, steel, and aluminum industries.
- The uncertainty surrounding the tariff dispute, with key figures expressing differing opinions, falls under the broader category of politics and policy-and-legislation, and is being closely followed as general news by various international parties, as evidenced by news articles and reports from the European Commission and the International Monetary Fund.
