U.S. and EU scramble to strike a trade deal ahead of Aug. 1 deadline
As the clock ticks down, a series of pacts with other U.S. trading partners in recent days have raised hopes of avoiding a potentially damaging trade war with Europe, with experts saying a deal with Japan announced on Tuesday could serve as a template for a deal with the EU.
The U.S. has also recently announced the outlines of trade deals with China, Indonesia, the Philippines and U.K., though with many details still remaining to be finalized.
For consumers and businesses on both sides of the Atlantic, much is riding on the outcome of the trade talks. Absent a deal, President Trump has threatened to hit imports from the EU's 27 member countries with a 30% tax. In preparing possible countermeasures, the European Commission has said it would impose tariffs on more than $100 billion worth of U.S. goods starting Aug. 7, AFP reported on Wednesday.
Negotiations are ongoing and a U.S.-EU trade war could yet be avoided. Citing EU diplomats, AFP also said officials with the trading block could be open to a 15% U.S. tariff rate, with potential carveouts for key sectors, according to the wire service.
The White House did not immediately respond to questions about the status of talks with the EU, including whether the Trump administration expects to reach a trade deal by the Aug. 1 deadline.
President Trump on Tuesday struck a trade deal with Tokyo that calls for a 15% tariff on Japanese imports. In return, the deal calls for Japan to invest $550 billion in the U.S. and further open its domestic market to U.S. exports, including cars and certain farm products.
The 15% tariff rate on Japanese goods is five percentage points higher than a baseline tariff the Trump administration imposed on all foreign imports on April 2. But it is lower than the 25% he threatened against Japan earlier this month and the 24% duties his administration proposed in early April.
"The Japan deal solidifies this pattern we've seen thus far, which is some market access relief, a commitment to purchase U.S. goods, and a slightly lower, but above the universal baseline, tariff level," Alex Jacquez, chief of policy and advocacy at Groundwork Collaborative, a public policy research firm, told CBS MoneyWatch.
"The Japan deal certainly provides a framework of what [Mr. Trump] looking for," Jacquez said. "It's about accepting a baseline tariff at or above 10%, and then making purchase commitments."
A key element of Mr. Trump's trade deals has been a commitment by other nations to invest in the U.S. The president has defended tariffs as a way to revive the country's domestic manufacturing base and make American exports more competitive, as well as to generate additional federal revenue.
"We are learning that the promise of greater investment into the U.S. works well with the administration," EY Parthenon chief economist Gregory Daco said. "The promise to invest $550 billion was a big part of the Japan-U.S. trade deal. It was a key catalyst to securing a deal."
The EU, whose member states have a combined gross domestic product of $20 trillion, could likely commit to a large investment in the U.S. because it could span a number of years and focus on key sectors, such as technology, energy or artificial intelligence, Daco added.
Additional commitments by the EU to purchase American-made goods and to lower trade barriers to U.S. exports could also help close a deal, he said. "Those don't cost much, and they're an easy bargaining chip to put forward."
Although a 15% baseline U.S. tariff on EU imports would represent a retrenchment from Mr. Trump's earlier threats, it would still drive up prices for U.S. businesses and consumers, according to Daco.
"While it may seem like a great deal, it's still much higher than the tariffs that the U.S. was imposing at the end of 2024," he noted. "So there would still be a positive inflation shock because of higher tariffs. There would also be demand erosion coming from reduced business investment, hiring,and reduced consumer spending as a result of these higher tariffs."
Currently, the average U.S. tariff rate on imports is around 15%, according to his analysis. If Mr. Trump's threatened tariffs go into effect, that rate would rise to more than 20%. If the EU agrees to a 15% tariff rate, however, the average U.S. tariff rate on imports from around the world would drop to 19.5%.
"That's still a significant increase in the average rate," Daco said. "It's a lot higher than the 2.5% where we started the year."
Because most U.S. imports from the EU include industrial inputs like components, raw materials and machinery, any added costs would take tie to work their way through the supply chain, according to Ryan Young, a senior economist at the Competitive Enterprise Institute, a nonpartisan think tank.
"It would affect manufacturing exports faster than it would affect American consumers, but it would raise prices all around," Young said. AFP
contributed to this report.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Forbes
a few seconds ago
- Forbes
Alina Habba's One-Time Replacement Desiree Grace Calls Firing ‘Completely Unjustified,' Report Says
Desiree Grace, the prosecutor whom judges appointed to replace ex-Trump lawyer Alina Habba as New Jersey's U.S. attorney, has filed a long-shot complaint challenging the Trump administration's decision to fire her, Bloomberg reports, as the Justice Department's decision to keep Habba on after her initial term expired has sparked legal challenges. Alina Habba speaks during a press conference with now-President Donald Trump at Trump Tower on September 6, 2024 in New York City. Getty Images Grace filed a complaint with the U.S. Merit Systems Protection Board, which handles federal employees' disputes over their employment, according to Bloomberg, citing a filing obtained through a Freedom of Information Act request. The Justice Department fired Grace on July 22, hours after the state's federal judges voted for her to become the U.S. attorney in New Jersey—appointing her to the role instead of extending Habba's term. Attorney General Pam Bondi said Grace, who had been serving as Habba's first assistant, had been 'removed' after 'politically minded judges refused to allow [Habba] to continue in her position.' The DOJ then used a complex legal maneuver to keep Habba on as acting U.S. attorney, despite her tenure as the interim attorney expiring and the Senate not voting on her confirmation to permanently fill the role. Grace, who had previously suggested she still intended to try and serve as U.S. attorney, argued to the Merit Systems Protection Board that her firing was 'completely unjustified' and was in 'direct retaliation' for her being named to the U.S. attorney role, as quoted by Bloomberg. Grace, the Justice Department and the U.S. Merit Systems Protection Board have not yet responded to requests for comment. As of now, it's unlikely. The board lacks a quorum after President Donald Trump fired one of its Democratic appointees earlier this year, which means it can't actually decide cases right now. Board member Cathy Harris' lawsuit challenging her firing is still moving forward in court, but the Supreme Court let Trump fire her while it does, and it's unclear if the case will ultimately be resolved in Harris' favor and result in her being reinstated. What To Watch For The Trump administration's decision to override the opinion of the New Jersey judges and keep Habba on as U.S. attorney has sparked new legal challenges. Several defendants being prosecuted on criminal charges in New Jersey have argued Habba was not lawfully appointed, and thus the indictments against them are invalid and should be dropped. A Pennsylvania court will hear arguments on Aug. 15 over that dispute, after it was moved out of New Jersey due to judges' involvement with Habba's initial ouster. Grace is a 37-year-old veteran prosecutor who has been serving in the New Jersey U.S. attorney's office since 2016, The New York Times reports, citing her LinkedIn profile. She had been serving as the second-in-command at the office prior to her termination, after previously holding roles leading the office's violent crimes and criminal divisions, in which she prosecuted gang members, securing convictions against multiple members of MS-13. Grace is a registered Republican, according to the Times, and had previously earned high praise from Habba, who reportedly said in May that appointing Grace as her deputy was the best decision she had made as U.S. attorney. Key Background Habba was named as the U.S. attorney in New Jersey in March after becoming well-known as one of Trump's most vocal legal advocates. The lawyer began representing Trump in 2021—after previously serving as the attorney for a parking garage—and was on his legal team for such major cases as the civil fraud trial against Trump and his company and a defamation case brought by writer E. Jean Carroll. Habba did not have any prosecutorial experience prior to becoming U.S. attorney, but frequently advocated for Trump in the media and in court, earning her a spot as a White House adviser before being named as a U.S. attorney. The DOJ's decision to override the will of the judges by keeping Habba in place comes as the White House has repeatedly attacked judges for issuing opinions against the administration, and as Trump has tried to use the DOJ in order to advance his agenda and punish his critics. In addition to Habba, the Trump administration used similar legal maneuvering to keep another U.S. attorney, John Sarcone III, in place after judges in the Northern District of New York also declined to extend his term. Further Reading Forbes Criminal Defendants Challenge Alina Habba's Authority As She Stays On As U.S. Attorney—What To Know By Alison Durkee Forbes The Alina Habba Saga Explained: How Trump May Get Her Back In Power—But Not As U.S. Attorney By Alison Durkee Forbes DOJ Fires Alina Habba's Replacement As U.S. Attorney Hours After Ouster By Alison Durkee
CBS News
a few seconds ago
- CBS News
Trump administration sanctions popular hip hop artist "El Makabelico" over alleged ties to Mexican drug cartel
The Trump administration said Wednesday it was sanctioning Mexican musician Ricardo Hernández, known as "El Makabelico," over allegations that the artist was laundering money for a drug cartel. The move comes after the administration has stripped the visas of some of Mexico's most famous musicians, targeting those whose genres often explore themes related to cartels. The U.S. Treasury Department accused Hernández, a musician they refer to as a "narco-rapper," of being associated with the Cartel del Noreste, CDN, an evolution of the former Zetas Cartel. According to the department, he laundered money for the criminal group through concerts and events. The CDN is one of several Latin American organized crime groups that the Trump administration has designated as a foreign terrorist organization. The administration alleges that 50% of Hernández's royalties on streaming platforms go directly to the cartel, leading to his sanctioning alongside leaders of the cartel on allegations that he acted for or on behalf of the criminal group. Hernández did not immediately respond to a request for comment. "CDN depends on these alternative revenue streams and money laundering methods to boost their criminal enterprise, diversifying their income beyond criminal activity like drug trafficking, human smuggling, and extortion," wrote the Treasury Department in a news release. The sanctions would block the rapper's properties in the U.S. and freeze financial transactions with any businesses owned by those sanctioned, and threaten secondary sanctions against foreign financial institutions that do business with them. Hernández, whose stage name is a play on words relating to cartels, performs his songs wearing a black ski mask and often sings songs related to the criminal groups, making reference to street life, cartel lifestyles and the realities faced in cartel-dominated areas. In recent years, young artists like Peso Pluma have brought Mexican genres into the international spotlight by mixing traditional rhythms with trap and other styles, competing with global stars including Taylor Swift and Bad Bunny on streaming platforms. The genres — primarily "narco-corridos" — have also become the center of controversy because a number of artists sing about cartels and "narco culture" associated with them. Some songs romanticize criminals, while others speak to the harsh realities of youth living in cartel-controlled areas, similar to rap music in the U.S. Several regions in the country have banned "narco-corridos," sparking a recent riot during a concert after a singer refused to perform some of his most popular songs. The music has long fueled a debate about the fine line between artistic expression and censorship, as a number of Mexican states have previously banned performances of certain genres. In recent months, the Trump administration has revoked the visas of a slew of artists related to the genre. In May, the famous northern Mexican band Grupo Firme, which has taken steps to distance itself from the cartel-centric themes of the genre, announced it would have to cancel an upcoming show in California because its visas were suspended. In April, the administration said it was revoking the visas of the band Alegres de Barranco after they flashed the face of a cartel boss behind them at a concert, prompting a controversy and even criminal investigations in Mexico. In June, the band released an anti-narco song in a bid to clear its name. Mexican musicians have previously been targeted by criminal groups that pay them to compose and perform songs that glorify the exploits of their leaders. Such performers often live in close proximity to their drug lord patrons, and can at times get caught up in gang turf battles. In May, five members of the group Fugitivo were found dead in Tamaulipas state, days after being hired to perform a concert. Their deaths were blamed on suspected drug traffickers. In January this year, a small plane was reported to have dropped pamphlets on a northwestern city threatening around 20 music artists and influencers for alleged dealings with a warring faction of the Sinaloa drug cartel In 2018, armed men kidnapped two members of the musical group "Los Norteños de Río Bravo," whose bodies were later found on the federal highway connecting Reynosa to Río Bravo, Tamaulipas. In 2013, 17 musicians from the group Kombo Kolombia were executed by alleged cartel members in the northeastern state of Nuevo Leon, allegedly because of links to a rival gang. Agence France-Presse contributed to this report.
Associated Press
a few seconds ago
- Associated Press
Trump wields influence over GOP and keeps potential successors vying for his favor
WASHINGTON (AP) — Although President Donald Trump has not directly said he thinks JD Vance should be the heir to his 'Make America Great Again' base of support, he acknowledged this week that his vice president is probably the favorite to succeed him 'at this point.' But even as he promoted Vance, Trump also made sure to mention Secretary of State Marco Rubio, telling reporters at the White House on Tuesday that his administration's top diplomat is 'somebody that maybe would get together with JD in some form' on a future political ticket. The remarks reflect the massive influence the Republican president currently has over his party. They also serve to promote two of Trump's top advisers without telegraphing the president's singular preference for a successor. Not definitively anointing Vance, or any other Republican, keeps those hoping to succeed Trump vying for his favor, both inside his administration and in the wider Republican field of possible contenders. Speaking with reporters following an executive order signing at the White House, Trump was asked if Vance were the 'heir apparent to MAGA.' 'I think most likely, in all fairness, he's the vice president,' Trump said. 'I think Marco is also somebody that maybe would get together with JD in some form. ... It's too early obviously, to talk about it, but certainly he's doing a great job and he would be, probably favorite at this point.' When Trump selected the then-39-year-old Vance over other more established Republicans — including Rubio — as his running mate last year, many theorized that Trump was planning for the future of his political movement, angling for a vice president who could carry MAGA forward. Vance has embraced the role at every turn, doing the president's bidding on everything from his relationship with Ukraine to the fight over records related to the Jeffrey Epstein sex trafficking scandal. Trump, meanwhile, has not hesitated to give Vance high-visibility assignments. As the White House promotes mid-decade redistricting efforts in Texas — and acknowledges it would like the notion to expand to other states — Vance is expected Thursday to discuss redrawing district lines with Gov. Mike Braun during a trip to Indiana. While there, Vance will also headline a fundraiser for the Republican National Committee, which he serves as treasurer. In June he traveled to Los Angeles trip to tour a multiagency Federal Joint Operations Center and a mobile command center amid clashes between protesters and police and outbreaks of vandalism and looting following immigration raids across Southern California. And earlier this year, Vance was in swing congressional districts in his role as lead cheerleader for Trump's signature tax cut and spending law, an assortment of conservative priorities that Republicans dubbed the 'One Big, Beautiful Bill.' He also lobbied senators on Capitol Hill, working to swing GOP holdouts to support the legislation, and in July cast a tie-breaking vote to get the measure passed in the Senate. He's also taken on a robust role related to foreign policy, holding meetings of his own with world leaders, including Indian Prime Minister Narendra Modi during a trip to New Delhi, and Israeli Prime Minister Benjamin Netanyahu at the White House. Rubio, who has described Vance as among his closest friends in politics, said on Fox News Channel on Sunday that he felt Vance 'would be a great nominee if he decides he wants to do that.' Other Republicans mentioned as possible 2028 contenders are already making the rounds of early-voting states. Virginia Gov. Glenn Youngkin speaks at a GOP fundraiser in South Carolina this weekend, and Arkansas Gov. Sarah Huckabee Sanders headlines an event in that state later this month. Both have taken pains to stay in the president's good graces. Not every Republican contender has gone that route. Kentucky Sen. Rand Paul, who lost the 2016 nomination to Trump, has been visiting early-voting states, too, but he voted against the president's signature legislative measure. And Georgia Gov. Brian Kemp — who has long harbored ambitions to run for president but has a complicated history with Trump — recently said he was sitting out of a Senate race in his state, a decision telegraphed by some as an indication Kemp might be eyeing the 2028 White House race. ___ Kinnard can be reached at
