The European Union is identifying concessions it is willing to make to Donald Trump’s administration to secure the partial removal of the US tariffs that have already started hitting the bloc’s exports and that are set to increase after April 2nd.
EU officials were told at meetings this week in Washington that there was no way to avoid new auto and so-called reciprocal tariffs that Mr Trump is launching next week, according to people familiar with the talks. Discussions also began on what the contours of a potential deal to reduce them should eventually look like.
That has prompted the European Commission, which handles trade matters for the EU, to start working on a “term sheet” for a potential agreement, which would set out areas for negotiations on the punitive trade measures, including lowering its own duties, mutual investments with the US as well as easing certain regulations and standards, said the people, who spoke on the condition of anonymity.
The reciprocal tariffs are meant to strike out against what Mr Trump considers to be unfair levies on US goods as well as non-tariff barriers, such as domestic regulations and how countries collect taxes, including the bloc’s value-added tax, digital taxes and regulations. The EU says its VAT is a fair, non-discriminatory tax that applies equally to domestic and imported goods.
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A spokesperson from the commission declined to comment.
Any deal negotiated by his lieutenants would still have to be approved by Mr Trump. This term sheet would form the basis for the commission to hold talks with the US after the reciprocal duties come into effect, said the people. Those tariffs will likely hit all or most of the goods from the EU being exported into the US.
The US has not indicated the tariff level it will apply on the EU but officials in the bloc expect the rate to fall between 10 per cent and 25 per cent, the people said. They added that any future deal would be difficult and would not restore the status quo, but would leave EU-US trade relations in a worse place than they currently are.
The bloc’s trade chief, Maroš Šefčovič, and European Commission president Ursula von der Leyen’s head of cabinet met with US commerce secretary Howard Lutnick, US trade representative Jamieson Greer and director of the National Economic Council Kevin Hassett earlier this week to discuss the situation.
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The bloc’s ambassadors were briefed on the discussions this week. The talks with the US made scant headway and there is little the EU can do to keep next week’s levies from being imposed, Bloomberg previously reported.
Non-tariff issues such as the VAT, digital taxes and several EU regulations and food standards featured prominently during the talks in Washington, as the Trump administration has focused its attacks on what it considers to be unfair barriers to American products that the US believes contribute to a transatlantic imbalance favouring Europe. The EU also raised the possibility of additional liquefied natural gas and defence-related purchases.
European officials have tried stressing that even though the EU has a goods trade surplus with the US, the 27-nation bloc imports a lot of American services ranging from ecommerce and social media sites to Internet search engines – all part of the US’s Big Tech industry that has recently cozied up to Mr Trump and his circle of advisers. EU and US firms have more than €5 trillion ($5.4 trillion) worth of investment in each other’s markets, according to the commission.
In addition to the reciprocal levies, the US is planning further tariffs on a number of sectors including metals, cars, pharmaceuticals, lumber and semiconductors. Mr Trump announced a 25 per cent levy on cars and some auto parts this week. – Bloomberg
