EU Proposes New Tariffs on US Exports Amid Ongoing Trade Tensions
The European Union (EU) is considering the imposition of tariffs on U.S. aircraft and automobile exports as part of a strategic move to compel former President Donald Trump to reconsider his existing and proposed tariffs on European goods. The new proposed list of targeted tariffs would significantly impact Boeing, one of the largest U.S. aerospace companies, along with a broader range of U.S. products, including chemicals, electrical equipment, health-related products, and certain food items like sweet potatoes and nuts.
This initiative from Brussels follows a recent announcement in which Trump revealed a tariff agreement with the United Kingdom. Days earlier, European Trade Commissioner Maroš Šefčovič reiterated that the EU would not be pressured into an unfair trade deal, emphasizing that preparations are in place for a variety of potential outcomes if current negotiations falter.
The EU's proposals also coincide with ongoing consultations with member states regarding potential legal action against the U.S. concerning the 20% reciprocal tariffs that Trump announced last month. Previously, the EU had introduced a list of $21 billion in retaliatory tariffs, which was subsequently paused. Some products on this list included motorcycles from Harley-Davidson, poultry, and clothing items.
Boeing could face severe repercussions from the new tariffs, and countries like Ireland may also feel the impact, as they brace for higher tariffs on pharmaceutical exports to the U.S. Meanwhile, Ryanair, an Irish budget airline, has expressed concerns over increased capital costs due to potential tariffs. The airline has already placed orders for 330 aircraft valued at around $30 billion, scheduled for delivery through 2034, and has threatened to explore alternative suppliers, including the Chinese manufacturer COMAC, should tariffs be enacted.
EU officials made it clear that their approach is not aimed at direct retaliatory measures but rather at addressing what they perceive as an imbalanced trade situation. They are considering various options concerning services that could include tariffs on major U.S. tech and social media companies, illuminating the idea that they still have various strategies on the table to address the ongoing trade disputes.
A four-week consultation period has been initiated to finalize the exact categories and rates for these potential tariffs by early July - just prior to the expiration of Trump's 90-day tariff pause. While the officials noted that they don’t intend to replicate U.S. tariffs directly, they plan to reassess the trade landscape to ensure a fairer balance. There’s the possibility that certain sectors, like automotive, which have already been impacted by Trump's earlier tariffs, may see higher tariffs on lesser-traded items.
Ultimately, the EU's strategy to implement new tariffs is designed to inject a sense of urgency back into EU-U.S. negotiations. They emphasize that any new tariffs are not simply retaliatory but aim to realign trade relationships. The importance of the aircraft and automobile sectors cannot be overstated, with a staggering $105 billion of aircraft sold to EU airlines and leasing companies projected for 2024, and car and car part exports valued at $125 billion the same year. Additional categories include electrical goods worth $72 billion and agrifood products nearing $64 billion annually. As the situation evolves, the EU remains vigilant and prepared to adapt its strategies to navigate these complex trade dynamics.
Related Sources: