Trump escalates EU tariffs deal demands while keeping cripplingly high penalty on a key industry
The president is reportedly making plans to slap the EU with tariffs of between 15 and 20 percent, as the two sides spar in talks that have caused market anxiety on both sides of the Atlantic.
The latest development comes in a report by the Financial Times, which writes that 'hardened stance' would be a minimum tariff that will test the EU trading bloc's tolerance for pain.
Trump on Saturday announced a 30 percent tariff to be slapped on imports from the EU and Mexico, in the latest tariff 'letter' announcement after securing only a handful of deals.
In that note, Trump once again described a trade deficit – where the U.S. exports more than it imports from a country – as a snub.
'We have had years to discuss our Trading Relationship with The European Union, and we have concluded we must move away from these long-term, large, and persistent, Trade Deficits, engendered by your Tariff, and Non-Tariff, Policies, and Trade Barriers,' Trump wrote. 'Our relationship has been, unfortunately, far from Reciprocal.'
That was a reference to the 'reciprocal' tariffs Trump first announced on 'Liberation Day' April 2, only to hit 'pause' after a market meltdown.
The FT reports that Trump has been 'unmoved' by the EU's efforts to reduce auto tariffs of 25 percent, and is happy to keep the tariffs where they are as planned, citing people familiar with talks.
EU Commission President Ursula von der Leyen has stated the bloc's commitment to dialogue while adding, 'At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required," von der Leyen said in a statement.'
President Donald Trump is preparing to impose tariffs of 15 to 20 percent on the European Union, according to the latest report on trade talks with the EU. Trump has been firing off trade 'letters' to various countries imposing stiff tariffs
Italian winemakers have warned that a 30 percent tariff is akin to a 'virtually an embargo' on the product.
At the start of the trade war, one family importer told the Daily Mail they were facing a $1 million tax hit.
German auto industry association BDI called the escalatory move 'incomprehensible,' and told NBC that 'the costs for our companies have already reached the billions—and with each passing day, the total continues to grow.'
Americans could face shortages of wine, cheese, and pasta, a European agriculture association warned.
French President Emmanuel Macron has also warned of preparing 'credible countermeasures.'
The EU has been seeking to resolve the issue through talks – while preparing countermeasures that are getting the attention of U.S. exporters.
American whiskey could also take a hit. The Distilled Spirits Council of the U.S. said in a statement this week that the EU suspension of a retaliatory tariff of 25 percent 'on American Whiskey over the last three years has allowed U.S. distillers to begin rebuilding their presence in our largest export market.'
'The EU's decision to put Bourbon back on its retaliatory target list is a serious setback and deeply alarming,' said association president Chris Swonger. 'This decision threatens to undo the hard-won progress made by American distillers and will be a crushing blow to the recovery of U.S. spirits exports to the EU.'
U.S. exports to the EU surged when the retaliatory tariff got paused.
White House Press Secretary Karoline Leavitt said Thursday the U.S. won't accept a delay of the August 1 deadline, after Trump in the past bristled at the idea of a TACO trade effect – which stands for 'Trump Always Chickens Out.'
Michal Baranowski, Polish undersecretary of state at the ministry of economic development and technology, said that, as work continues in a bid to reach a deal, the first part of the EU's strategy is to negotiate with U.S. officials in good faith.
While seeking a deal, 'let's prepare for countermeasures in case we don't [reach a deal]. And we have countermeasures on both the steel and aluminium tariffs as well as the initial package of 72 billion [euros] for so-called reciprocal tariffs,' Michal Baranowski, a Polish economy minister told CNBC.
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