EU gains leverage in trade talks as US court casts doubt on tariffs, EU officials say

Time of India

3 days ago

The
European Union
has gained leverage in trade talks with the United States after a U.S. court cast doubt on the legality of Washington's "reciprocal" tariffs, EU officials said on Friday.
A U.S. federal appeals court temporarily reinstated President Donald Trump's tariffs on Thursday, a day after a U.S. trade court ruled that Trump had exceeded his authority in imposing the duties and ordered an immediate block on them.
"The uncertainty as to the legality of the 'reciprocal' tariffs certainly gives us extra leverage," one EU official close to the talks said. "The talks will continue, as formally we still look for zero-for-zero tariffs."
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If the court system ultimately rules against Trump's use of the IEEPA emergency act, the administration could make use of other provisions in the U.S. Trade Act such as Section 301, which has been broadly used with China.
"You'd need to establish 'injury' and a legal basis and it takes months. Administratively, they might still do a hatchet job ... given checks and balances are not that strong in the U.S. right now but it won't be as easy or done as quickly as IEEPA," Niclas Poitiers, research fellow at EU Brussels think tank Bruegel, told Reuters
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"It would at least buy the EU some time."
The EU was willing to discuss some non-trade barriers with the U.S., EU officials said, but would not touch the EU's taxation system -- such as the value added tax or digital tax -- or food safety standards.
The EU officials said the uncertainty created by the court rulings and the Trump administration's tariff policy had a positive aspect for Europe, which was seen by markets as an oasis of stability in comparison.
"This is the watchword: uncertainty. It is impossible to know what the status of the tariffs will be next week, not to mention next month," one of the EU officials said.
"If you want sane, stable, even boring, rules-based order and predictable business environment, Europe is the place for you."
Meanwhile, some European companies, worried over the uncertainty and possible major hits to their business, are holding their own talks with U.S. authorities.
Volkswagen CEO Oliver Blume said his company was holding "fair" and "constructive" talks with the U.S. government on tariffs and wanted to make further investments in the country.
The European Commission conducts all trade negotiations on behalf of the 27-nation bloc and companies, or even individual EU countries, cannot legally get a deal outside that framework.
"Now it looks like we're not in the most damaging economic scenario ... but it still maintains the uncertainty and maybe increases it because there is a new player that people have not taken into account so far - the courts," Poitiers at Bruegel said.
EU-US TRADE TALKS
The European Commission would not comment on the U.S. court rulings because they were internal U.S. procedures.
But it said trade talks between Brussels and Washington would continue, with Europe sticking to its offer of mutual zero tariffs on industrial goods.
"There's no change in our approach, we proceed as planned with both technical and political meetings next week," a Commission spokesperson said.
EU Trade Commissioner Maros Sefcovic in a post on the X social media platform said he held a phone call with U.S. Commerce Secretary Howard Lutnick on Friday.
"Our time and effort fully invested, as delivering forward-looking solutions remains a top EU priority. Staying in permanent contact," Sefcovic said on X.
More trade talks between the U.S. and the EU are scheduled for next week, on the sidelines of the OECD Ministerial Council Meeting in Paris on June 3-4.
The EU officials said the U.S. courts' rulings validated the EU view that the sweeping "reciprocal" tariffs, imposed on all goods from the EU and many other countries around the world on April 2, were unjustified.
They also said that while U.S. courts did not question Washington's 25% tariffs imposed on European steel, aluminium and cars, the rulings could also play a role in the EU's efforts to get those tariffs lowered or removed.