EU drawing up list of potential tariffs on US services

Irish Times

2 days ago

The EU is preparing a list of potential
tariffs
on US services, as well as export controls, as part of its possible retaliation if trade talks with Washington fail, two officials briefed on the negotiations said.
The
European Commission
, which is assembling the list of measures as part of its response to US President
Donald Trump's
tariffs, still has to present the list to European Union (EU) countries.
Mr Trump has announced he plans to hit the bloc with 30 per cent tariffs from August 1st.
While Brussels has previously warned that it could expand the transatlantic trade war to services if talks to avoid those tariffs fail, it has not presented concrete measures to European capitals.
One of the officials stressed the list would not only focus on US tech companies, which have strong lobbying power in Mr Trump's White House.
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Any EU move to put levies on US services will be of concern to Ireland, given the presence of most of the big American tech firms employing thousands of people here.
The list would come on top of a proposal for retaliation against €72 billion of annual US imports that EU countries are already discussing and which includes tariffs on Boeing aircraft, cars and bourbon.
A person familiar with the latest proposal said it would include levies on digital services. Commission president Ursula von der Leyen threatened this action in April.
'An example is you could put a levy on the advertising revenues of digital services,' she said at the time.
Bernd Lange, the chair of the European Parliament's trade committee, who is frequently briefed on the talks, welcomed the move. The US has a deficit in goods with the EU but a surplus in services, making it more vulnerable to retaliation in that sector.
'It's not really foreseen that an acceptable balanced deal will be possible between the US and the EU. So it is important to prepare,' Lange said.
'The US tech giants generate a lot of their income in Europe and the US has an annual surplus in services of about $100 billion.
'So it is necessary also to prepare a third step on the escalation ladder; a levy on digital services.'
The bloc could use its enforcement regulation to draw up the services list, which would require approval from member states.
This latest package also includes the first export controls, which would add fees to the export of steel scrap and some chemicals.
European scrap is sent to the US where it is melted in electric arc furnaces to be reused in new steel products.
The EU and the US have been negotiating to secure a trade deal since April, when Mr Trump announced 20 per cent 'reciprocal' tariffs on EU imports. He then dropped them to 10 per cent to allow time for negotiations before a July 9th deadline, which has since been pushed back to August 1st.
Then, on July 13th, he threatened he would increase the levies to 30 per cent on August 1st.
According to the two officials, the EU could accept 10 per cent tariffs but wants to reduce separate sectoral tariffs of 25 per cent on cars in any deal.
It also wants to guarantee an exemption from future sectoral tariffs promised by Mr Trump on pharmaceuticals and semiconductors.
The EU's trade chief Maros Sefcovic is in Washington for discussions with his US counterparts. On Monday, he warned that there was still 'quite a big gap' between the two sides. While the EU's preference is for a deal, he said 'all instruments' were being considered for retaliation measures.
The commission has postponed until August 6th a separate plan to hit €21 billion of annual US imports – drawn up in response to Mr Trump's separate duties on imports of steel, aluminium and cars from the EU – to allow time for talks.
The commission declined to comment.
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