Relief and Criticism Surrounding the EU Tariff Accord with the USA - Criticism and Praises Surface Regarding EU Customs Union with the United States
In a significant development, President Trump and EU Commission President Von der Leyen have announced a new EU-US trade agreement. Here's a breakdown of the key aspects, criticisms, and potential implications of this deal.
Tariffs
The agreement introduces a 15% US tariff on EU imports, including autos, replacing the previously threatened 30% tariffs but increasing from the current 10% rate. This shift has raised concerns as the EU had aimed for a zero-for-zero tariff deal, potentially making EU-US trade more expensive and challenging, particularly for sensitive industries like pharmaceuticals in Ireland and others across the EU.
Energy Purchases and Investments
The EU has agreed to purchase $750 billion worth of US energy, primarily liquefied natural gas, and invest an additional $600 billion in the US. While these commitments are yet to be fully realised, they are seen as a significant boost to the US economy.
Steel/Aluminum Quotas
A quota system for steel and aluminum tariffs based on historic export levels is under negotiation but not yet fully detailed. The ambiguity around the quota mechanics has raised skepticism, with concerns that the system could favour US exports over EU exports.
Non-Tariff Barriers
The deal aims to address non-tariff barriers affecting food and agricultural trade by streamlining sanitary requirements for US pork and dairy, and to eliminate "unjustified digital barriers" — maintaining zero customs duties on electronic transmissions and no network usage fees.
Industry Impacts
Critics argue that the higher tariffs could lead to increased costs and trade frictions, requiring businesses to closely monitor evolving US trade policies. The agreement's potential impact on specific industries and countries remains uncertain, with many details still to be clarified.
Economic/Security Cooperation
The agreement includes commitments on economic security, supply chain resilience, and cooperation on investment reviews, export controls, and duty evasion.
While the deal is designed to rebalance trade and foster closer cooperation, it faces criticism over tariff increases and lack of clarity on key mechanisms, which could significantly impact EU industries and trade costs. The 27 EU member states must approve the agreement, with EU ambassadors set to discuss it for the first time on Monday.
As the details of this agreement unfold, it is crucial for businesses and policymakers alike to closely monitor its evolution, particularly in areas like steel and aluminum where tariffs remain at 50%. Critics warn that the EU is paying a high price in the long run and endangering rule-based world trade. Economist Veronika Grimm urges the EU to focus on its own growth agenda, while Julian Hinz from the Kiel Institute for the World Economy calls for a more cautious approach to this agreement.
In the end, while President Trump hailed his deal as "a good agreement for everyone," many observers see the outlines of this basic agreement as highly one-sided - to the detriment of Europeans.
- The European Parliament should closely scrutinize the new EU-US trade agreement, particularly the increased tariffs on EU imports such as autos and sensitive industries like pharmaceuticals, as they could potentially make EU-US trade expensive and challenging.
- The European Parliament must carefully consider the implications of the EU's commitments to purchase $750 billion worth of US energy and invest an additional $600 billion in the US, as these financial commitments could significantly impact EU's business and politics, as well as its general news landscape.
