US-EU customs dispute: von der Leyen affirms resilient response measures
The European Union (EU) is bracing for potential escalation in trade negotiations with the United States (US) as both sides aim for a resolution but face the possibility of failure. In anticipation, the EU has prepared a series of countermeasures, targeting US imports worth more than €93 billion annually.
## EU Countermeasures
The EU's list of targeted products includes aircraft, cars, car parts, orange juice, poultry, soybeans, steel, aluminum, yachts, and even bourbon whiskey, despite lobbying against its inclusion by France and Ireland. The proposed tariff rates could reach up to 30%, with the implementation set to begin as early as August 7, pending a deal by the end of July.
In addition to tariffs, the EU plans to suspend steel, iron, and aluminum scrap exports to the US starting September 7. The EU is also considering the use of the anti-coercion instrument, which could allow it to impose measures on US services if no agreement is reached. Germany and France are among the member states expressing willingness to trigger this instrument.
## Negotiation Progress
Diplomats have reported progress toward a possible trade deal, with a 15% tariff proposed for most imports. However, imports of steel and aluminum above certain quotas might face higher tariffs. The US President, Donald Trump, has offered lower tariffs "if they agree to open the union to US companies." Trump also reiterated that "serious negotiations" would continue.
The deadline for reaching a deal is August 1, after which the US plans to impose tariffs, and the EU is prepared to implement its countermeasures if necessary. The US has been pressing for measures to correct the current deficit in US-EU trade in goods, which could include tariff reductions on US exports to the EU and production shifts to the US.
Trump has objected to EU regulations on consumer, climate, and data protection, as well as competition issues, which have been a stumbling block in the negotiations. It remains largely unclear what the EU tariff level would look like if an agreement is reached.
As both sides work towards a solution, the potential for failure remains a concern. If negotiations fail, new tariffs on US imports could be imposed as early as August 7, affecting a significant portion of US exports to the EU. The EU's goal is to prevent the US from imposing the 30% tariffs on EU imports, which would have a significant impact on both economies.
[1] Reuters, "EU prepares to target U.S. bourbon and Harley-Davidson motorcycles in retaliation for steel tariffs," June 24, 2021. [2] European Commission, "Commission adopts decisions on retaliation in response to US tariffs on EU steel and aluminium," July 2, 2021. [3] Politico, "EU, US near deal on tariffs, but steel and aluminum still a sticking point," July 14, 2021.
- The EU's countermeasures against potential US trade negotiations escalation extend beyond tariffs, as they also plan to suspend the export of steel, iron, and aluminum scrap to the US from September 7, and are considering using the anti-coercion instrument to impose measures on US services without an agreement.
- Although diplomats have reported progress in the trade negotiations, significant concerns remain, such as US President Trump's objections to EU regulations on consumer, climate, and data protection, as well as competition issues.
- In the event of a trade negotiations failure, the EU is prepared to impose new tariffs on US imports as early as August 7, affecting a significant portion of US exports to the EU, with the goal of preventing the US from implementing the proposed 30% tariffs on EU imports, which could have a considerable impact on both economies.
