Trade Tensions: Trump's UK Victory, EU's Retaliatory Threat
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U.S. President Trump Reaches Agreement with the British – European Union Contemplates Retaliatory Tariffs - U.S. President Trump finalizes agreement with United Kingdom; European Union responds with potential retaliatory tariffs.
US President Donald Trump is celebrating a trade victory with the UK, while the EU stands ready with retaliatory tariffs on US goods worth nearly $120 billion.
Trump declared a "very big deal" at a White House press conference, expressing optimism about a potential agreement with the EU despite Brussels' retaliatory threats.
The US-UK trade deal marks the first significant agreement with a major trading partner since Trump imposed tariffs in early April. Trump indicated that many more deals could follow.
Prime Minister Keir Starmer, on the phone during the press conference, proclaimed, "This is truly a fantastic, historic day."
Though Trump described the agreement as "comprehensive," sources from the UK government suggest it focuses on specific areas, serving as a foundation for further negotiations.
Under the terms of the deal, tariffs on UK car imports are set to be reduced from 25% to 10% for a quota of 100,000 vehicles, according to US Trade Minister Howard Lutnick. Aircraft parts from Rolls-Royce will enter the US duty-free. In return, the UK will import $10 billion (around €8.9 billion) worth of Boeing aircraft. Tariffs on UK steel and aluminum will be eliminated.
The trade volume between the US and the UK was around €370 billion last year. Approximately 70% of UK exports to the US are services and not subject to tariffs, while only about 30% are goods.
Initial assessment of the trade pact by a legal expert suggests it's a negotiating success for the UK. Holger Hestermeyer, who teaches International and EU Law at the Vienna Diplomatic Academy, stated, "They managed to reduce or avoid the new Trump tariffs without crossing red lines like lowering food standards."
Trump had threatened the EU with widespread tariffs of 25% if no agreement was reached. The deadline is scheduled for July. To date, the Trump administration has not responded to a Brussels offer for the mutual elimination of all tariffs on industrial goods.
If negotiations with Washington fail, the European Commission is prepared to impose retaliatory tariffs on industrial and agricultural products such as cars, sweet potatoes, and whiskey. Machinery, auto and aircraft parts, chemicals, whiskey, rum, and wine from the US could also be affected by additional tariffs.
While the EU Commission prepares for potential counter-tariffs and plans to challenge the US tariffs at the WTO, there's hope that the list will be assessed in the US, prompting export-oriented companies to pressure the government in Washington to reach an agreement with the EU.
The trade agreement with Trump is seen as a symbolic success for Starmer. Economic approval with the European Union, set to make significant progress at a summit in London on May 19 with EU Commission President Ursula von der Leyen and EU Council President António Costa, is considered more important.
Speculation about a dynamic agreement in the area of animal health and food standards is ongoing, but there will be no chlorine chicken or hormone-treated beef in British supermarkets. The EU remains the more important trading partner for the UK, as approximately half of British goods exports go there, while only 16% are destined for the US.
Enrichment Data:- The US has imposed broad "reciprocal" tariffs on imported goods from most countries, including a general 10% tariff and additional territory-specific tariffs. The EU has been subject to these tariffs, with certain exemptions.- The EU has approved new trade countermeasures targeting approximately €18 billion of U.S.-origin products in response to the US tariffs. These measures are part of a broader set of countermeasures worth around €26 billion when including previous measures.- The European Commission has outlined potential retaliatory tariffs targeting €95 billion of US products if negotiations fail. These measures are still in the consultation phase and are intended to rebalance trade relations rather than retaliate.- The EU plans to challenge the US tariffs on cars and the 10% blanket tariffs at the World Trade Organization (WTO).- The EU is the more important trading partner for the UK, with approximately half of British goods exports going there, while only 16% are destined for the US.
- The EU, amid the US's imposed tariffs on imported goods, is set to impose retaliatory tariffs on US goods worth nearly $120 billion, following Donald Trump's trade victory with the UK.
- Ursula von der Leyen, the EU Commission President, is preparing for potential counter-tariffs and plans to challenge the US tariffs at the WTO, aiming to rebalance trade relations at the upcoming summit in London.
- In the event that negotiations with Washington fail, the European Commission is prepared to impose retaliatory tariffs on industrial and agricultural products, including cars, sweet potatoes, and whiskey, as well as machinery, auto and aircraft parts, chemicals, whiskey, rum, and wine from the US.
- Holger Hestermeyer, an International and EU Law expert, commends the UK for managing to reduce or avoid the new Trump tariffs, without crossing red lines like lowering food standards.
- Keir Starmer, the Prime Minister, proclaims the US-UK trade deal as a symbolic success and emphasizes the importance of making significant economic progress with the European Union at the upcoming summit.
- The US has imposed broad "reciprocal" tariffs on imported goods from most countries, including a general 10% tariff and additional territory-specific tariffs, the EU being one of the affected parties with certain exemptions.
