EU waits for clarity on Trump's threat to impose a 50% tariff
The European Commission has sought clarification from the United States following Donald Trump's Friday recommendation to impose a 50% tariff for EU imports starting June 1. Washington and Brussels are due to meet later.
The Commission, the body that oversees the trade policy of the 27-nation European Union said it wouldn't comment on the threat of tariffs until after the call between European Trade Commission Maros Sefcovic, and U.S. Representative Jamieson Greer, at 1500 GMT.
After Trump's announcement, European stocks fell and the euro lost some of its gains. Yields on euro zone government bonds also dropped sharply.
Holger Schmieding is the chief economist of Berenberg. You never know with Trump. This would be a major escalate. "The EU would need to respond and this would be something that would hurt the U.S. economy and European economies."
The EU faces import tariffs of 25% on steel, aluminum and cars, and "reciprocal tariffs" of 10% on almost all other products. This levy was to increase to 20% when Trump's 90 day pause ends on July 8.
Washington claims the tariffs were imposed to make up for the U.S. goods trade deficit with the European Union. According to Eurostat, the EU's statistics agency, the U.S. had a deficit of almost 200 billion euro ($226.48billion) in the last year. The United States has a significant trade surplus with the EU for services.
According to sources familiar with the report, Washington sent Brussels a demand list to reduce the deficit. This included so-called nontariff barriers, such as adopting U.S. standards for food safety and removing the national digital service taxes.
The EU's response was to propose a deal that would be mutually beneficial. This could include both sides moving towards zero tariffs for industrial goods. In addition, the EU may buy more soybeans and liquefied gas, and they might also cooperate on issues like steel overcapacity which both sides blame China.
Sefcovic and Greer's call was scheduled as a follow up to these exchanges, and in anticipation of a potential meeting in Paris early in June.
Michal Baranowski said that the threat of a 50% tariff was a negotiation tactic.
"The European Union is negotiating with the United States." "Some negotiate behind closed door, while others prefer to do so in front of the cameras," he said on the sidelines a meeting held in Brussels. He added that negotiations could continue until early July.
He said: "The fact we have seen some important statements made in public does not mean they will be translated into actions by the U.S. Administration."
The European Commission has said repeatedly that it prefers a negotiated resolution, but is prepared to take countermeasures in the event of a failure of negotiations.
The bloc imposed, then suspended, tariffs on 21 billion euro of annual U.S. steel imports as a response to U.S. tariffs. It has also compiled a 95 billion euro list of U.S. products to counter the U.S. "reciprocal" and car tariffs. $1 = 0.8831 Euros (Reporting and editing by Toby Chopra, Susan Fenton and Toby Chopra)
(source: Reuters)
