Latest news with #EUUSdeal
Irish Times
4 hours ago
- Business
- Irish Times
Why did the EU sign a tariff deal overwhelmingly favourable to the US?
So the EU and US have agreed a deal on tariffs. What is in it? The EU has struck a deal with US president Donald Trump that will place a 15 per cent tariff on practically all goods sold from EU countries to the US. US goods will not be charged similar tariffs when they are imported into the EU. The deal saw off the prospect of much higher tariffs Trump had threatened to put on future EU trade. It also includes a commitment that the EU will buy large amounts of liquefied natural gas and other energy from the US. What is a tariff? A tariff is basically a tax paid on goods imported from one country to another. The tariff is paid by the importer, but part of the cost will be borne by companies selling to the US, and part will be passed on to US consumers, raising the price. All in that means EU businesses will probably sell fewer goods in the US market, or make less profit doing so. Is this a good deal? It is overwhelmingly favourable to Trump and the US. The EU made many concessions as the price of avoiding a fight that could have spun into a devastating trade war. READ MORE The European Commission, the EU's executive arm that led the negotiations, has argued president Ursula von der Leyen got the best deal she could. From Ireland's perspective, the 15 per cent tariffs on transatlantic trade represents a blow. But the Government was keen for the EU to cut a quick deal that (hopefully) ends months of uncertainty. [ Trump's tariffs: What the world got wrong about US president's trade policy Opens in new window ] We've heard a lot about tariffs on pharmaceutical products. What is happening there? One of the big questions during the EU-US talks centred on the fate of pharmaceutical products. The industry accounts for a big chunk of Ireland's trade with the US, due to the manufacturing plants of Pfizer, Eli Lilly and other pharma giants in the Republic. Trump has frequently talked about using tariffs to bring pharma manufacturing and jobs back to the US. The sector has avoided US import taxes to date, but they are coming. This deal will cap those future tariffs at the 15 per cent rate. Is the EU getting anything in return for all of this? Not much. Higher tariffs of 27.5 per cent charged on EU-made cars will be brought down to that blanket 15 per cent. The deal does include some exemptions to US tariffs for aircraft parts, which is welcome for Ireland's aviation sector. Negotiations are ongoing to expand those exemptions to other industries and products, such as whiskey and wine.
Yahoo
3 days ago
- Business
- Yahoo
Tariff of 15% ‘challenging' but avoids a trade war
A tariff rate of 15% is 'challenging' but avoids a rate of 30% – which would have 'closed the market' in the US, Ireland's enterprise minister has said. Peter Burke said that the EU-US deal avoids both a trade war and EU counter-measures, which would have had an effect on the north-south economy. He said 'the devil is in the detail' of the trade agreement finalised on Sunday by Donald Trump and European Commission president Ursula von der Leyen in Scotland. 'We had a lot of modelling carried out on the various different options, and some were very perverse, that would have closed the market if you had over a 30% tariff with a stacking mechanism,' Mr Burke told RTE Radio. 'The key thing is that there will be a number of carve outs. Obviously, aviation has been cited as zero-for-zero, but also in relation to agrifoods and potentially spirits.' The bloc is set to face 15% tariffs on most of its goods including cars, semiconductors and pharmaceuticals entering the US and 'zero for zero' tariffs on a number of products including aircraft, some agricultural goods and certain chemicals – as well as EU purchases of US energy worth 750 billion dollars over three years. Mr Burke said it was his understanding that the 15% tariff on the pharmaceutical sector would be a maximum rate. He added: 'I think the president of the Commission has been very clear that 15% will be a ceiling.' It is still unclear from the deal, agreed five days before Mr Trump's threat of a 30% tariff would have come into effect, will mean Ireland will need to invest in US energy, he added. 'This all has to be worked out yet, as you can appreciate, I'm only hearing this for the first time last night, and we have nothing on paper.' Ireland's premier Micheal Martin and deputy premier Simon Harris welcomed the agreement struck on Sunday, saying that while Ireland 'regrets' the baseline tariff of 15%, it welcomed the certainty for businesses. Mr Harris said further detail was needed around how tariffs would affect sectors including pharmaceuticals. Ireland remains vulnerable to a slow down in trade with the US economy, due to exports of products such as alcohol, dairy and beef. The Irish government has also expressed concern at how tariffs could affect pharma multinationals based in Ireland, which employs about 45,000 people in Ireland, as Mr Trump had signalled he intended to target that industry. In addition, 65% of all aircraft are leased through Ireland globally. Business group Ibec said although the uncertainty may be dissipating, the agreement was 'punishing' for Europe. The group's chief executive Danny McCoy said 'Europe has capitulated on this' and 15% is 'very substantial'. 'I don't think it's a great deal if I'm really honest,' Simon McKeever, of the Irish Exporters Association, said. He said the deal was not a good one for Irish businesses and said the EU was negotiating with 'one if not two hands tied behind our backs' because of the EU's reliance on the US in relation to defence and security. He said questions remained about the effect it would have on Northern Ireland given the UK had a lower tariff of 10% in place. 'There's a huge amount of this that is extremely uncertain,' he said. Last week, Finance Minister Paschal Dohonoe said the Irish government would spend 9.4 billion euro on its budget in October, based on a zero-tariff scenario for next year. He and Public Expenditure Minister Jack Chambers said these estimates would need to be revised if there was a shock to the Irish economy. Mr Burke said it was not naive to base the government's economic scenario on a zero-for-zero trade agreement with the US. 'No it wasn't because we didn't know what we were to be faced with,' he said on Monday. 'We do need to find out what happens in other areas, because this is very complex. 'It depends what happens with China, that's a very significant market that a deal hasn't happened yet. 'It really impacts what happens with our exporters here in Ireland as well, because so much product is in danger of being redirected into EU market. 'We also don't know what separate carve outs are going to emerge for the different sectors that are so vulnerable from an Irish perspective. 'Until we get flesh on the bones and all those areas over the coming weeks, we'll be in a better position then to really put forward what budgetary parameters (we) will end up with.'
Irish Times
3 days ago
- Business
- Irish Times
How the EU's ‘lopsided' US trade deal was done
The European Commission's main man on trade, Maros Sefcovic , sat across from US commerce secretary Howard Lutnick in the Roosevelt Room of the White House in mid-February. Earlier that week Lutnick, the man who would be charged with overseeing Donald Trump' s radical trade agenda, had been confirmed in the Senate. Keen to avoid the economic turmoil of tariffs Trump had spoken often and fondly about on the campaign trail, Sefcovic made Lutnick an offer. The EU and the US could both agree to drop pre-existing tariffs each charged the other on the trade of cars and other industrial goods. The proposal got no traction. READ MORE [ EU-US tariffs deal at 15% preferable to 'ruinous' trade war, says Taoiseach Opens in new window ] Five months on and Sefcovic was again sitting across from Lutnick, this time in the ballroom of Trump's Turnberry golf resort in Scotland on Sunday, where commission president Ursula von der Leyen and Trump cut a deal on tariffs. The agreement spares the world an imminent trade war between the European Union and the United States, but possibly only delays fights on some other fronts. The EU agreed to accept import taxes of 15 per cent on practically all products sold to the US, as the price of avoiding even higher rates Trump had threatened to levy on transatlantic trade from August 1st. The commission, the union's executive arm that negotiated the deal on behalf of the 27 EU states, secured commitments that steeper rates on cars would be brought down. Future US tariffs expected on pharmaceutical exports and semiconductors, would be capped at 15 per cent as well. Several intensive summer weeks of talks at a more technical level involving officials, and between the two political interlocutors Lutnick and Sefcovic, had brought a possible landing zone for a deal into view. However, a lot hung on what would happen when Trump and von der Leyen sat down together. The head of the commission agreed to fly to Scotland, where Trump was on a five-day visit that started at one of his golf courses. Officials were hopeful, but it was not clear when the EU delegation walked into the room if they would come out with a deal. 'It was a real negotiating session,' a senior commission official said. Trump's opening position at the start of the meeting was that the EU should suck up tariffs of 30 per cent, to do business with the US. The EU team of von der Leyen, her trusted adviser Bjoern Seibert, two commission trade officials, and Sefcovic, had been prepared for Trump to open with a big number. The US president dropped his tariff demand to 21 per cent, before settling on 15 per cent. That figure had largely been teed-up by EU and US officials in the days before the crunch meeting in Scotland. 'We stayed very firm on agriculture and other issues. There were a lot of moving parts, agriculture was not one of them, [or] food safety rules and our digital legislation,' the senior commission source said of those final talks. The EU had been adamant since the start that changes to its rules barring US chlorine-washed chicken or hormone-treated beef from the European market were off-limits. The EU also ruled out Trump's demands that the bloc pare back its strict regulations of the online sphere and scrap its system of charging value added tax (VAT) on goods. European businesses have faced across-the-board tariffs of 10 per cent since Trump's 'liberation day' announcement on 2nd April. Backlash from the financial market in the days afterwards forced Trump to delay higher rates he wanted to charge on US trading partners. The EU-US agreement is light on specific detail, but ends speculation about what final tariff rate EU states would end up paying. Not everybody is happy. French prime minister François Bayrou, a long-time ally of centrist president Emmanuel Macron, labelled it a 'submission' by the EU. A former EU trade commissioner who was in the Berlaymont during Trump's first term, Cecilia Malmström, said the union should have taken a tougher stance from the outset. German chancellor Friedrich Merz and Italian prime minister Giorgia Meloni, two EU leaders who had actively been pushing for a quick, ugly deal over a perfect one, welcomed the agreement. Speaking in Brussels on Monday, Sefcovic said the alternative would have been a damaging trade war between the two economic heavyweights. Trump's threatened duties of 30 per cent would have made much of the trade that currently crosses the Atlantic to the US market unviable. Some five million jobs in Europe would be at 'great risk' in such a scenario, the commissioner said. There were still some people that seemed to believe things could go back to how they were before Trump rolled out his sweeping tariff agenda, he said. 'It is quite obvious that the world which was there before the 2nd of April is gone, and we simply need to adjust,' Sefcovic said. One key constituency likely on von der Leyen's mind throughout the negotiations has been the German automobile industry, who rely on big exports of BMW, Volkswagen and other cars to the US. Cars were a politically contentious point of the talks. Trump has long complained that a lot more EU-made cars are sold in the US, than American vehicles are bought by Europeans. On that front the EU side can point to something of a win. The agreement delivered by the commission president will cut the total US tariff rate on cars from 27.5 per cent, down to that blanket 15 per cent levy. Imports of steel and aluminium, another sector Trump had targeted with specific tariffs, will continue to be subject to higher rates of 50 per cent. However, a quota system that allows the EU to sell a certain amount of steel and aluminium products to the US at lower rates is being worked out. The commission offered to do away with lower, pre-existing tariffs the EU charges on a range of products, as a further sweetener to Trump. That is expected to remove trade levies of between one and four per cent on US exports of nuts, processed and raw fish, cheese and some dairy, and pet food. The EU also committed to buy hundreds of billions of euros of liquefied natural gas, oil and nuclear power from the US over the coming years, as Europe weans itself off energy supplied by Russia. Bernd Lange, a centre-left German MEP who heads the European Parliament's trade committee, said the deal was 'lopsided' in favour of the US, with many concessions that were difficult to accept. The EU did negotiate some relief from Trump's hefty 15 per cent tariffs. Aircraft and plane parts sold to the US will avoid tariffs, as will some generic pharmaceutical products and medical devices. Negotiations are continuing to extend those tariff exemptions to the spirits and wine industry. 'We seem to be more advanced on spirits than on wines, but we are continuing the engagement,' a senior EU official involved in ongoing talks said. Senior commission officials, von der Leyen, and Sefcovic are all adamant that the truce caps any future US tariffs on pharmaceuticals at 15 per cent. As one of Europe's major exports to the US from Ireland and other countries, the fate of the industry in the talks had been a concern of several governments. Trump himself had indicated pharma would not be part of the deal, when speaking to reporters minutes before the meeting with von der Leyen started. The president still plans to pressure pharmaceutical companies to shift manufacturing capacity, jobs and corporate tax revenue to the US. A US trade probe (known as a Section 232 investigation) is due to conclude shortly, which will provide extra cover for Trump to hit the sector with tariffs for the first time. Sefcovic said he believed the US administration would 'honour' its commitment that those coming import taxes would not be higher than 15 per cent. A final judgment on the deal the EU has agreed with the US will probably hinge on whether Trump keeps his word on that or not.
France 24
3 days ago
- Business
- France 24
Home from home: Trump showcases his resorts in golf diplomacy
European Commission President Ursula von der Leyen found herself at the centre of this unabashed "golf diplomacy" on Sunday, as she visited the US president's Turnberry course to seal an EU-US trade deal. Criticised by some European political leaders as a capitulation by Brussels, the pair announced the pact to the world from a lavish ballroom named after Trump. "This just opened ... (a) relatively short time ago and it's been quite the success," the former real estate developer boasted to an impassive von der Leyen. "It's an honor to have you at the new ballroom at Turnberry," he added. Trump acquired the storied complex on Scotland's stunning southwestern coast in 2014. Like all his properties and assets, Turnberry was transferred to a holding company now managed by his sons. The family have long hoped it will again be used to host golf's British Open, the only major men's event outside the United States. It last hosted the illustrious occasion in 2009, well before Trump took charge of it. 'Con job' On Monday, he had to be content with welcoming Keir Starmer to the resort, as the UK prime minister arrived to talk trade and international affairs to the wail of the bagpipes, which initially drowned out their words. Starmer said it was "fantastic to be here, thank you for your hospitality, and to see this amazing golf course. "I'll invite you to a football ground at some stage, we can exchange sports," Starmer, who is a football fan, told Trump. The US president later regaled the UK leader during a rambling press conference with tales of how he used local Scottish tradesmen to repair the ballroom's roof and huge windows. The pair were to travel to another Trump golf resort in northeast Scotland later Monday to be joined by Scottish leader John Swinney, where the US president will inaugurate a new course on Tuesday. The controversy during Trump's first term around the use of his own properties to conduct government business appears to have largely dissipated. The 79-year-old Republican leader announced in 2019 he would host an upcoming G7 summit at another of his branded golf courses in Florida, before backing down following a domestic political backlash. Six years on in Scotland, he appears very much at home in his own residences bearing his name in golden letters at the entrance -- and even on paper cups provided to visitors. Any outcry appears minimal as Trump openly holds court with European leaders between rounds of golf, seemingly bending them to his will. Swinney, who had expressed a preference for Trump's Democrat rival Kamala Harris during last year's US presidential election contest, has drawn criticism after reportedly agreeing a subsidy for a tournament to be held on the Aberdeenshire course. 'Ugly turbines' Meanwhile on Sunday, von der Leyen courteously listened as the American president chastised Europe for its migration policies and ranted about wind turbines, which he branded a "con job". "In all fairness Germany tried it and wind doesn't work," he told his European counterpart, who happens to be German. Trump, who has made personal preoccupations political priorities, has long disliked wind turbines railing against them as being "ugly", and battling -- unsuccessfully -- to stop the installation of an offshore cluster near his Aberdeenshire golf course. Von der Leyen appeared at pains to remain diplomatic, making a point of flattering the American president. "You're known as a tough negotiator and dealmaker," she said. "But fair!" Trump interrupted, eliciting approving laughter from his delegation. "But fair," the EU chief conceded, ahead of a brief discussion which culminated in the Europeans resigning themselves to 15 percent tariffs on their exports to the US.
Reuters
3 days ago
- Business
- Reuters
Key elements of EU-US trade deal
BRUSSELS, July 28 (Reuters) - The United States and the European Union agreed on a framework trade deal, ending months of uncertainty for industries and consumers on both sides of the Atlantic. Here are the main elements of the deal: * Almost all EU goods entering the U.S. will be subject to a 15% baseline tariff, including cars, which currently face 27.5%, as well as semiconductors and pharmaceuticals. The 15% tariff is the maximum tariff and is not added to any existing rates. * The U.S. is to announce the result of its 232 trade investigations in a few weeks and decide on tariff rates for the sectors under investigation. But the EU-U.S. deal already secures a 15% tariff for European chips and pharmaceuticals, so the results of the investigations will not change that, U.S. officials said. It is not yet clear, however, if the same 15% rate has been set for timber and copper, which are also under U.S. 232 investigation. * The U.S. and EU will have zero-for-zero tariffs on all aircraft and their components, certain chemicals, certain generic drugs, semiconductor equipment, some agricultural products, natural resources and critical raw materials. More products would be added. * The situation for wine and spirits - a point of friction on both sides of the Atlantic - is still to be established. * Tariffs on European steel and aluminium will stay at 50%, but European Commission President Ursula von der Leyen said these would later be cut and replaced by a quota system. * The EU pledged to make $750 billion in strategic purchases, covering oil, gas, nuclear, fuel and chips during U.S. President Donald Trump's term in office. * The EU pledged to buy U.S. military equipment. * European companies are to invest $600 billion in the U.S. over the course of Trump's second term. Unlike Japan's package - which Tokyo says will consist of equity, loans and guarantees from state-run agencies of up to $550 billion to be invested at Trump's discretion - EU officials said the Europe's $600 billion investment pledge is based on private sector projects already in the pipeline.
