
US tariffs on European goods threaten to shake up the world's largest trade relationship
Trump imposed a 20% import tax on all EU-made products in early April as part of a set of tariffs targeting countries with which the United States has a trade imbalance. Hours after the nation-specific duties took effect, he put them on hold until July 9 at a standard rate of 10% to quiet financial markets and allow time for negotiations.
Expressing displeasure the EU's stance in trade talks, however, Trump said he would increase the tariff rate for European exports to 50%, which could make everything - from French cheese and Italian leather goods to German electronics and Spanish pharmaceuticals - much more expensive in the U.S.
The EU's executive commission, which handles trade issues for the bloc's 27-member nations, said its leaders hope to strike a deal with the Trump administration. Without one, the EU said it was prepared to retaliate with tariffs on hundreds of American products, ranging from beef and auto parts to beer and Boeing airplanes.
Here are important things to know about trade between the United States and the European Union.
The EU's executive commission describes the trade between the U.S. and the EU as "the most important commercial relationship in the world.'
The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.
The biggest U.S. export to Europe is crude oil, followed by pharmaceuticals, aircraft, automobiles, and medical and diagnostic equipment.
Europe's biggest exports to the U.S. are pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits.
Trump has complained about the EU's 198 billion-euro trade surplus in goods, which shows Americans buy more stuff from European businesses than the other way around.
However, American companies fill some of the gap by outselling the EU when it comes to services such as cloud computing, travel bookings, and legal and financial services.
The U.S. services surplus took the nation's trade deficit with the EU down to 50 billion euros ($59 billion), which represents less than 3% of overall U.S.-EU trade.
Before Trump returned to office, the U.S. and the EU maintained a generally cooperative trade relationship and low tariff levels on both sides. The U.S. rate averaged 1.47% for European goods, while the EU's averaged 1.35% for American products.
But the White House has taken a much less friendly posture toward the longstanding U.S. ally since February. Along with the fluctuating tariff rate on European goods Trump has floated, the EU has been subject to his administration's 50% tariff on steel and aluminum and a 25% tax on imported automobiles and parts.
Trump administration officials have raised a slew of issues they want to see addressed, including agricultural barriers such as EU health regulations that include bans on chlorine-washed chicken and hormone-treated beef.
Trump has also criticized Europe's value-added taxes, which EU countries levy at the point of sale this year at rates of 17% to 27%. But many economists see VAT as trade-neutral since they apply to domestic goods and services as well as imported ones. Because national governments set the taxes through legislation, the EU has said they aren't on the table during trade negotiations.
"On the thorny issues of regulations, consumer standards and taxes, the EU and its member states cannot give much ground,' Holger Schmieding, chief economist at Germany's Berenberg bank, said. "They cannot change the way they run the EU's vast internal market according to U.S. demands, which are often rooted in a faulty understanding of how the EU works.'
Economists and companies say higher tariffs will mean higher prices for U.S. consumers on imported goods. Importers must decide how much of the extra tax costs to absorb through lower profits and how much to pass on to customers.
Mercedes-Benz dealers in the U.S. have said they are holding the line on 2025 model year prices "until further notice.' The German automaker has a partial tariff shield because it makes 35% of the Mercedes-Benz vehicles sold in the U.S. in Tuscaloosa, Alabama, but the company said it expects prices to undergo "significant increases' in coming years.
Simon Hunt, CEO of Italian wine and spirits producer Campari Group, told investment analysts that prices could increase for some products or stay the same depending what rival companies do. If competitors raise prices, the company might decide to hold its prices on Skyy vodka or Aperol aperitif to gain market share, Hunt said.
Trump has argued that making it more difficult for foreign companies to sell in the U.S. is a way to stimulate a revival of American manufacturing. Many companies have dismissed the idea or said it would take years to yield positive economic benefits. However, some corporations have proved willing to shift some production stateside.
France-based luxury group LVMH, whose brands include Tiffany & Co., Luis Vuitton, Christian Dior and Moet & Chandon, could move some production to the United States, billionaire CEO Bernaud Arnault said at the company's annual meeting in April.
Arnault, who attended Trump's inauguration, has urged Europe to reach a deal based on reciprocal concessions.
"If we end up with high tariffs, ... we will be forced to increase our U.S.-based production to avoid tariffs,' Arnault said. "And if Europe fails to negotiate intelligently, that will be the consequence for many companies. ... It will be the fault of Brussels, if it comes to that.'
Some forecasts indicate the U.S. economy would be more at risk if the negotiations fail.
Without a deal, the EU would lose 0.3% of its gross domestic product and U.S. GDP would fall 0.7%, if Trump slaps imported goods from Europe with tariffs of 10% to 25%, according to a research review by Bruegel, a think tank in Brussels.
Given the complexity of some of the issues, the two sides may arrive only at a framework deal before Wednesday's deadline. That would likely leave a 10% base tariff, as well as the auto, steel and aluminum tariffs in place until details of a formal trade agreement are ironed out.
The most likely outcome of the trade talks is that "the U.S. will agree to deals in which it takes back its worst threats of 'retaliatory' tariffs well beyond 10%,' Schmieding said. "However, the road to get there could be rocky.'
The U.S. offering exemptions for some goods might smooth the path to a deal. The EU could offer to ease some regulations that the White House views as trade barriers.
"While Trump might be able to sell such an outcome as a 'win' for him, the ultimate victims of his protectionism would, of course, be mostly the U.S. consumers,' Schmieding said.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

Kuwait Times
2 hours ago
- Kuwait Times
Ancelotti handed year in jail for tax fraud in Spain
Carlo Ancelotti MADRID: A Spanish court on Wednesday sentenced former Real Madrid manager Carlo Ancelotti to a year in jail for tax fraud committed in 2014, a punishment that will not oblige the Brazil coach to serve prison time. Prosecutors alleged the Italian created a system of shell companies to hide extra earnings during his first spell as Real Madrid manager in 2014 and 2015, notably through image rights. They said the 66-year-old, one of the most successful managers in football history, failed to pay more than one million euros due to undeclared earnings in those years, seeking four years and nine months in jail against him. Ancelotti denied having intentionally committed fraud at his highly publicized trial in April, saying he never realized a scheme allowing him to collect some of his salary in image rights would see him pay less tax. A Madrid court announced in a ruling it had convicted Ancelotti for 'an offence against the treasury ... to the punishment of one year in prison' and a fine of 386,361 euros ($452,821). But the former Chelsea, Bayern Munich and Paris Saint-Germain boss, who no longer lives in Spain, will not serve jail time because the sentence is less than two years and he has no criminal record. The court cleared Ancelotti of the fraud allegation for the 2015 tax year. — AFP

Kuwait Times
2 hours ago
- Kuwait Times
Bibi, Trump prioritize captives, not truce as 105 martyred in Gaza
WASHINGTON/GAZA: Zionist Prime Minister Benjamin Netanyahu said on Wednesday his meeting with US President Donald Trump had focused on freeing captives held in Gaza, as the Zionist entity continued to pound the Palestinian territory amid efforts to reach a ceasefire. Netanyahu said on X that the leaders also discussed the consequences and possibilities of 'the great victory we achieved over Iran,' following an aerial war last month in which the United States joined Zionist attacks on the Islamic Republic's nuclear sites. On the ground, Gaza's civil defense agency said Wednesday that 105 people were killed and 530 wounded in Zionist strikes, at least six of them children. 'The explosion was massive, like an earthquake,' said Zuhair Judeh, 40, who witnessed one of the strikes, which prompted frantic scenes as people scrabbled in the rubble for survivors. 'It destroyed the house and several nearby homes. The bodies and remains of the martyrs were scattered,' he added, calling it 'a horrific massacre'. Netanyahu is making his third US visit since Trump took office on Jan 20 and had earlier told reporters that while he did not think the Zionist entity's campaign in the Palestinian enclave was done, negotiators are 'certainly working' on a ceasefire. Trump met Netanyahu on Tuesday for the second time in two days to discuss the situation in Gaza, with the president's Middle East envoy indicating that the Zionist entity and Hamas were nearing an agreement on a ceasefire deal after 21 months of war. Hamas official Taher Al-Nunu told Reuters they were engaged in a 'difficult round' of negotiations. The top issue for the group's negotiators was the free flow of aid into Gaza as well as the location of withdrawal lines of Zionist forces, and guarantees that negotiations would pave the way to a permanent ceasefire, he said. A delegation from Qatar, the host of indirect talks between Zionist negotiators and the Palestinian group Hamas, met senior White House officials before Netanyahu's arrival on Tuesday, Axios said, citing a source familiar with the details. Steve Witkoff, Trump's special envoy to the Middle East, said the number of issues preventing the Zionist entity and Hamas from reaching an agreement had decreased from four to one, expressing optimism for a temporary ceasefire deal by the end of the week. Witkoff told reporters at a Cabinet meeting that the anticipated agreement would involve a 60-day ceasefire, with the release of 10 living and nine deceased hostages. Netanyahu met with Vice President JD Vance before visiting the US Capitol on Tuesday, and was due back in Congress on Wednesday to meet US Senate leaders. 'We have still to finish the job in Gaza, release all our hostages, eliminate and destroy Hamas' military and government capabilities,' Netanyahu told reporters on Tuesday. In recent weeks, the Zionist military has continued to hammer Gaza, where a teddy bear lay in the rubble on Wednesday at the site of one overnight airstrike in southern Gaza's Khan Yunis. Umm Mohammed Shaaban, a Palestinian grandmother mourning the deaths of three of her grandchildren in the attack, questioned the timing of a proposed ceasefire. 'After they finished us, they say they'll make a truce?' she said. In Gaza City, people removed debris after another overnight airstrike, searching through a three-story house for survivors to no avail. One resident, Ahmed Al-Nahhal, said there was no fuel for trucks to help in rescue efforts. 'From midnight till now, we have been looking for the children,' he said. Nearby men carried bodies in shrouds while women wept. Some kissed bodies placed in the back of a vehicle. The Zionist war has killed over 57,000 Palestinians, mostly civilians, and reduced much of Gaza to rubble. Hamas has long demanded an end to the war before it would free the remaining captives. Israel has insisted it would not agree to stop fighting until all hostages are released and Hamas dismantled. The United Nations estimates that most of Gaza's population of more than 2 million has been displaced, with experts saying in May that nearly half a million people faced the risk of starvation. Netanyahu has meanwhile expressed hope that the Zionist entity could expand the Abraham Accords, normalization deals reached between the United Arab Emirates, Bahrain and Morocco in 2020 under US mediation. 'We are working on this with full vigor,' Netanyahu said on X. - Agencies

Kuwait Times
2 hours ago
- Kuwait Times
FIFA opens office in Trump Tower
FIFA opens office in Trump Tower Trump to attend Club World Cup final • Infantino thanks US president for 'big support' WASHINGTON/EAST RUTHERFORD: US President Donald Trump will attend Sunday's Club World Cup final in East Rutherford, New Jersey, he said at a Cabinet meeting on Tuesday, as world soccer's ruling body FIFA announced it had opened an office in New York's Trump Tower. The expanded tournament featuring many of the world's best club teams has been widely seen as a dry run for the 2026 World Cup, which will be co-hosted by the United States, Canada and Mexico. Sunday's Club World Cup final at MetLife Stadium will be a preview of next year's championship match, with the home of the NFL's New York Jets and Giants also hosting the 2026 finale. 'I'll be going to the game,' Trump told reporters. The news came a day after FIFA President Gianni Infantino announced the opening of a representative office at Trump Tower, where the Club World Cup trophy will be on display until the final. 'FIFA is a global organization and to be global, you have to be local, you have to be everywhere, so we have to be in New York,' FIFA president Gianni Infantino said at an event in Manhattan. 'So today, we are opening an office of FIFA here in Trump Tower.' FIFA already has offices in Miami and the move deepens ties between Infantino and US President Donald Trump. Infantino attended Trump's inauguration earlier this year, has appeared alongside the US President at the Oval Office and joined him on a recent visit to Qatar and Saudi Arabia. 'Thanks, of course, to President Trump as well, who is a big fan of soccer, (together with) the whole family,' added Infantino, who was speaking ahead of the semi-finals of the Club World Cup taking place at the MetLife Stadium just across the Hudson River from Manhattan. The first 32-team Club World Cup concludes this weekend, while the World Cup in June and July next year will be the first to feature 48 teams. Eleven of the 16 venues in 2026 will be in the United States, with three in Mexico and two in Canada. The final will take place in the MetLife Stadium in East Rutherford, New Jersey. 'We have received such a big support from the government and from the President with the White House Task Force for the FIFA Club World Cup and for the FIFA World Cup next year,' Infantino said before declaring the ongoing tournament 'an incredible success'. Trump has not shied away from sport's super-sized spotlight during his second term, becoming the first sitting president to attend a Super Bowl in February, and in May announcing DC as the host for the 2027 NFL Draft from the Oval Office. His immigration crackdown and travel ban on 12 countries have prompted concerns ahead of the 2026 World Cup, however, even as Infantino offered assurances that the world will be welcomed in the US for the quadrennial global showpiece event. A memo obtained by Reuters last month showed that the Trump administration was considering significantly expanding its travel restrictions by potentially banning citizens of 36 additional countries from entering the US. — Agencies