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NBC News
28 minutes ago
- NBC News
U.S. tariffs on European goods threaten to shake up the world's largest trade relationship
FRANKFURT, Germany (AP) — The European Union expects to find out on Monday whether President Donald Trump will impose punishing tariffs on America's largest trade partner in a move economists have warned would have repercussions for companies and consumers on both sides of the Atlantic. 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 with 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. U.S. Treasury Secretary Scott Bessent told CNN's 'State of the Union' program on Sunday that 'the EU was very slow in coming to the table' but that talks were now making 'very good progress.' Here are important things to know about trade between the United States and the European Union. US-EU trade is enormous The European 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 was crude oil, followed by pharmaceuticals, aircraft, automobiles, and medical and diagnostic equipment. Europe's biggest exports to the U.S. were pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. EU sells more to the US than vice versa 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. What are the issues dividing the two sides? 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.' 'Consequence for many companies' 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.' 'Road could be rocky' 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.
BBC News
30 minutes ago
- BBC News
Trump tells Brazil to stop 'witch hunt' against Bolsonaro
US President Donald Trump has urged Brazilian authorities to end their prosecution of the country's former President Jair Bolsonaro, accusing them of carrying out a "WITCH HUNT".Bolsonaro, who governed Brazil between 2019 and 2022, is standing trial for allegedly attempting a coup against current President Luiz Inácio Lula da Silva. The former leader has denied involvement in any alleged a social media post, Trump said Bolsonaro was "not guilty of anything, except having fought for THE PEOPLE" and told prosecutors to "LEAVE BOLSONARO ALONE!"President Lula said Brazil is a sovereign country that "won't accept interference or instruction from anyone." "No one is above the law. Especially those that threaten freedom and the rule of law," he wrote in a post on his earlier post on Truth Social, Trump praised Bolsonaro as a "strong leader" who "truly loved his country". The US president compared Bolsonaro's prosecution to the legal cases he himself faced between his two presidential terms."This is nothing more, or less, than an attack on a Political Opponent - Something I know much about! It happened to me, times 10," Trump thanked Trump for his comments, describing the case against him as "clear political persecution" in a social media to Trump's remarks, Minister of Institutional Affairs Gleisi Hoffmann said: "The time when Brazil was subservient to the US was the time of Bolsonaro.""The US president should take care of his own problems, which are not few, and respect the sovereignty of Brazil and our judiciary," she back and fourth comes as Lula hosted representatives from China, Russia and other nations at a Brics summit in Rio de had earlier threatened to levy additional tariffs against countries aligned with what he called the bloc's "anti-American" policies. Trump and Bolsonaro enjoyed a friendly relationship when their presidencies overlapped, with the pair meeting at the White House in 2019. Both men subsequently lost presidential elections and both refused to publicly acknowledge defeat.A week after Lula's inauguration in January 2023, thousands of Bolsonaro supporters stormed government buildings in the capital, Brasilia, in what federal investigators say was an attempted coup. Bolsonaro was in the United States at the time and has always denied any links to the has been barred from running for public office until 2030 for falsely claiming Brazil's voting system was vulnerable to fraud, but he has said he intends to fight that ban and run for a second term in in court for the first time last month, Bolsonaro said a coup was an "abominable thing". The 70-year-old could face decades in prison if convicted.
NBC News
34 minutes ago
- NBC News
BRICS nations resist 'anti-American' label after Trump tariff threat
RIO DE JANEIRO, July 7 (Reuters) — Developing nations participating in the BRICS summit on Monday brushed away an accusation from U.S. President Donald Trump that the bloc is 'anti-American,' as he threatened them with additional 10% tariffs. Trump's threat on Sunday night came as the U.S. government prepared to finalize dozens of trade deals with a range of countries before his July 9 deadline for the imposition of significant 'retaliatory tariffs.' 'Tariffs should not be used as a tool for coercion and pressuring,' Mao Ning, the Chinese foreign ministry spokesperson said in Beijing. The BRICS advocates for 'win-win cooperation,' she added, and 'does not target any country.' South Africa, which was slapped with 30% tariffs that were later suspended pending trade talks, reaffirmed that it is 'not anti-American,' trade ministry spokesman Kaamil Alli said, adding that talks with the U.S. government 'remain constructive and fruitful.' A Kremlin spokesman said Russia's cooperation with the BRICS was based on a 'common world view' and 'will never be directed against third countries.' India and Brazil, which is hosting the BRICS gathering, did not immediately provide an official response to Trump. Brazilian President Luiz Inacio Lula da Silva told reporters that he would only comment after wrapping up the summit. His opening remarks to BRICS leaders gathered in Rio de Janeiro on Monday focused on the environmental and public health issues on the summit's official agenda. A Brazilian diplomat who was not authorized to comment officially said Trump's threat underscored the importance of the BRICS group to give developing nations a way to argue for fair and effective global ground rules on topics such as trade. Many BRICS members and many of the group's partner nations are highly dependent on trade with the United States. New member Indonesia's senior economic minister, Airlangga Hartarto, who is in Brazil for the BRICS summit, is to the U.S. on Monday to oversee tariff talks, an official told Reuters. Malaysia, which was attending as a partner country and was slapped with 24% tariffs that were later suspended, said that it maintains independent economic policies and is not focused on ideological alignment. Multilateral diplomacy With forums such as the G7 and G20 groups of major economies hamstrung by divisions and Trump's disruptive, opens new tab 'America First' approach, the BRICS group has presented itself as a haven for multilateral diplomacy amid violent conflicts and trade wars. In a joint statement released on Sunday afternoon, leaders at the summit condemned the recent bombing of member nation Iran and warned that the rise in tariffs threatened global trade, continuing its veiled criticism, opens new tab of Trump's tariff policies. Hours later, Trump warned he would punish countries seeking to join the group. The original BRICS group gathered leaders from Brazil, Russia, India and China at its first summit in 2009. The bloc later added South Africa and last year included Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates as members. Saudi Arabia formally accepting an invitation to full membership, but is participating as a partner country. More than 30 nations have expressed interest in participating in the BRICS, either as full members or partners.
