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Politico
3 days ago
- Business
- Politico
EU deal turns up heat on holdouts
QUICK FIX — President Donald Trump's trade deal with the European Union could prompt other partners to move more quickly in pursuit of assurances they'll avoid new tariffs next week. — Top Trump administration officials are meeting their Chinese counterparts this week, amid growing expectations for a leaders-level summit. — Senior U.S. officials said Section 232 tariffs on pharmaceuticals and semiconductors are expected within the next three weeks. It's Monday, July 28. Welcome to Morning Trade! Got news tips? Suggestions? Want to grab a coffee? Hit us up at: ahawkins@ ddesrochers@ and dpalmer@ Follow us on X: @_AriHawkins, @drdesrochers and @tradereporter. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving the day PRELIMINARY DEAL REACHED: Trump on Sunday reached a deal with the European Union to avert a renewed transatlantic trade war — raising pressure on the remaining U.S. trading partners without updated terms to shield them from planned Aug. 1. hikes. The background: On the heels of talks in Scotland with European Commission President Ursula von der Leyen, Trump told reporters the 27-country bloc agreed to purchase $750 billion of energy products and invest $600 billion more than planned into the United States. The deal also includes a flat 15 percent tariff on goods from Brussels with zero percent tariffs on U.S. goods. A senior U.S. official, granted anonymity to discuss talks, clarified in a call for reporters on Sunday that the rate would apply to at least some sectors that are currently the subject of probes, such as pharmaceuticals and semiconductors, under Section 232 of the Trade Expansion Act of 1962, which allows a president to restrict imports on certain industries to protect national security. Taste of talks: The official said that Trump sent the bloc a letter threatening a tariff hike earlier this month because 'we had met with them collectively 13 times in videos and in person, and they didn't even make us an offer.' But they added that Trump's letter supposedly 'changed everything' because the EU realized he was serious about his threats to massively hike tariffs. Everett Eissenstat, White House trade adviser during Trump's first term, told Morning Trade that countries now have a clearer sense of 'what parameters he'll agree to' — and cautioned that 'a lot of countries are going to feel domestic pressure to try to get an agreement before the deadline' on Friday. The U.S.-EU deal appears to closely match the terms of an agreement announced last week with Japan, which also set tariffs on most Japanese imports at 15 percent. Those reductions extended to autos and auto parts as well, partly mirroring a provision in the United Kingdom deal announced in May — which offered even greater relief by lowering tariffs to 10 percent on the first 100,000 cars entering the United States annually, and keeping that 'baseline' tariff in force. But while more countries now have more examples of the terms Trump is willing to accept, the update also underscores that among the U.S.' top 10 trading partners, only Mexico, Canada, Taiwan and India have yet to secure new agreements to shield them from the planned tariff hikes — putting them under new pressure to lock in concrete protections. North American pals? A separate White House official previously told Morning Trade that if higher rates are applied, only a portion of North American goods trade — potentially around 60 percent — would be subject to higher tariffs on trade with Canada and Mexico. Those countries have not recently been the central focus of the administration's trade negotiations, although finalizing the deal with the EU does 'open us up' to focus more concretely on other countries, that official told your host on Sunday. How we got here: In total, the U.S. has announced skeletal 'deals' with nearly half a dozen partners, including China, Japan, Indonesia and Vietnam. Meanwhile, U.K. Prime Minister Keir Starmer is speaking with Trump today in Washington, giving both countries another chance to hammer out remaining details of a broad framework they unveiled in May. REGULATORY REVIEW PUSH FOR A US-CHINA DEAL: The Trump administration is also pursuing talks with China ahead of a separate Aug. 12 deadline, with a U.S. delegation in Stockholm this week led by Treasury Secretary Scott Bessent. 'I'm going to be in Stockholm on Monday and Tuesday with my Chinese counterparts, and we'll be working out what is likely an extension then,' Bessent said in an interview last week. What to watch: The confab will give both countries another chance to iron out a long list of persisting trade disputes. China and the U.S. are even expected to nail down a deal that would delay a massive U.S. tariff increase scheduled to take effect next month, according to a report Sunday from the South China Morning Post, which cited unnamed sources. POLITICO has not confirmed that report. Background: Through a series of tit-for-tat trade measures, Trump ratcheted up tariffs on Chinese goods this past spring to 145 percent, including a 20 percent rate related to the flow of fentanyl into the U.S. Following meetings in Geneva and London, the U.S. reduced the additional tariffs on China to roughly 55 percent. That includes tariffs Trump imposed during his first term, as well as his second. However, under an executive order Trump signed on May 12, those rates are scheduled to go back up to 145 percent next month if a more comprehensive deal isn't reached. BRACE FOR SECTION 232'S: Sector-based tariffs on semiconductors and pharmaceuticals could be imposed within three weeks, a senior U.S. official told reporters on a call on Sunday. 'Those are coming over the next ... three weeks,' said the official, referring to tariffs that are likely to be imposed under Section 232, speaking on a call with reporters focused on the terms of the EU-U.S. trade deal. Why it matters: Sector-based tariffs are becoming an increasingly central focus of discussions, as tariffs Trump imposed under emergency powers face court challenges. Reminder: Commerce in April launched a pair of national security investigations that could lead to new tariffs on imports of pharmaceuticals and semiconductors, according to notices uploaded to the Federal Register. US LOCKS IN LUMBER HIKE: The Commerce Department on Friday announced its final decision raising anti-dumping duties on most Canadian softwood lumber imports to 20.56 percent, to offset unfairly low prices and Canadian government subsidies. The hike nearly triples the anti-dumping duty rate, which was set at 7.66 percent, and is in addition to 6.74 percent countervailing duties. The final rates are shaved down from preliminary figures unveiled in March, which would have set anti-dumping duties to 20.77 percent. TRADE OVERNIGHT — U.S. companies are facing annual costs of up to $97.6 billion due to European digital regulations, according to a new report from the Computer & Communications Industry Association Research Center — Jordan to tackle EU tech law on delegation to London, Brussels, per POLITICO Pro. — US steel producers urge Trump to maintain tough line on steel tariffs, per POLITICO Pro. — The US is nearing a trade deal with Europe. Will Trump stand in the way?, POLITICO reports. — Booker tells Dems to join TikTok, sparks Senate Rules pushback, POLITICO Pro reports. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@ ddesrochers@ and ahawkins@ Follow us @POLITICOPro and @Morning_Trade.
Politico
21-07-2025
- Business
- Politico
Trump's trade deals leave industry in ‘paralysis'
Presented by Autos Drive America With help from Doug Palmer and Grace Yarrow QUICK FIX — As President Donald Trump rushes to finalize new trade deals before the end of the month, American companies operating abroad are still waiting for clarity on existing agreements. — A top South African official tells Morning Trade the country will not accept a trade deal with the United States that eliminates all tariffs on American goods. — Republican lawmakers from farm states are beginning to lose patience with Trump's tariff strategy as harvest season approaches. It's Monday, July 21. Welcome to Morning Trade! Got news tips? Suggestions? Want to grab a coffee? Hit us up at: ahawkins@ ddesrochers@ and dpalmer@ Follow us on X: @_AriHawkins, @drdesrochers and @tradereporter. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving the day WHERE ARE THE PAPERS? Trump is under growing pressure from the business community to clarify the terms of his new trade agreements, amid warnings that the uncertainty is rattling investor confidence and leaving millions of dollars' worth of goods stuck in limbo. Sean Stein, the president of the U.S.-China Business Council, which represents more than 270 American companies that do business in China, said the confusion created for industry is clashing with Trump's goal of courting foreign investment. 'So far, these deals are not creating an environment that's going to lead to more investment in the U.S.,' Stein told Morning Trade in an interview, saying Trump's approach to trade and tariffs have introduced risk into the investment environment, leaving companies in 'paralysis.' One step back: Despite pledging '90 deals in 90 days' back in April, the U.S. has announced 'deals' with just four countries — including the United Kingdom, China and Vietnam — more than 180 days into the president's second term. The recent deals have not been accompanied with the release of completed texts, and diplomats say talks over the toughest terms are still dragging on. Trump most recently announced a new agreement with Indonesia on Truth Social, later telling reporters its new tariff rate would be at 19 percent but providing no further details. Trump is eyeing an Aug. 1 deadline for new tariffs on countries that fail to strike a deal with the U.S., which Commerce Secretary Howard Lutnick called a 'hard deadline' on Sunday in an interview with CBS News' 'Face the Nation with Margaret Brennan.' The administration also set an Aug. 12 target to reinstate sky-high tariffs on China unless the countries can reach a new arrangement, threatening yet another round of disruption for industries scrambling to keep up with shifting duty rates. It's complicated: Stein pointed to the lack of clarity about the terms of the deal with Vietnam as an example of the stress companies are under: Trump claimed he would slash tariffs on the country to 20 percent, or a 40 percent tariff if a product originated in a different country, but the administration has yet to clarify terms of the deal related to transhipment — leaving some companies with completed orders in limbo. The government of Vietnam has also not officially confirmed the terms of the deal, which people familiar with the discussions told POLITICO were altered at the eleventh hour. 'A day does not go by that I don't have two or three companies asking me, 'What does it mean?'' Stein said, referring to provisions of the Vietnam deal. ''What are they talking about?' Nobody knows. When you talk to people in the administration, they can't give you a clear answer about what they mean, either.' A right-leaning lobbyist from a major industry group, who frequently meets with administration officials and some of the country's largest multinational companies, said corporate leaders in all four countries have not yet received clear guidance — resulting in millions of dollars' worth of goods stranded at ports as businesses await clarity. 'The administration is not being transparent. They are not being open. There are just so many questions,' said the corporate lobbyist, who was granted anonymity to speak candidly. 'The president sees being non-transparent, being unpredictable as a real strength. He wants to keep everybody off balance. But for an administration that says, well, 'we're all about business,' it's been generally totally unresponsive and totally non-transparent.' Let's Make a Deal WHERE A ZERO-TARIFF DEAL WON'T FLY: There is no chance that South Africa would accept a trade deal with the United States that eliminates all tariffs on American goods, like the Trump administration says Vietnam and Indonesia have agreed to do, a top official at the Congress of South African Trade Unions told Morning Trade. If that's the best the United States can offer, South Africa will just live with the 30 percent tariff that Trump has threatened to impose effective Aug. 1 and try to develop new markets elsewhere, said Matthew Parks, parliamentary coordinator for the trade union group, after the annual USTR hearing on country eligibility for duty-free treatment under the African Growth and Opportunity Act on Friday. 'There's no South African company who could compete with a 30 percent tariff,' meaning 'thousands' of South African workers could lose their jobs, Parks said. Trump's earlier decision to impose a 25 percent tariff on autos and auto parts has already caused South Africa's auto exports to the United States to plummet 85 percent in recent months, he added. AGOA time running out: Friday's AGOA hearing was premised on the idea that the program will continue to exist, despite its pending expiration on Sept. 30. However, with that date less than three months away, there appears to be no chance of Congress passing a full 10- or 15-year renewal, as program supporters would like. Parks, who said he spent several days meeting with lawmakers last week, expressed hope Congress could at least approve a one- or two-year renewal before the program expires. That would provide a bridge past the 2026 congressional elections, when it might be easier to do more comprehensive reform, he said. However, spokespeople for Senate Finance and House Ways and Means did not provide any information Friday on that possibility. REGULATORY REVIEW WILL 'WAIT AND SEE' LAST? Farmers' patience with Trump could be waning as they scramble to understand and brace for a looming trade war ahead of harvest season, according to interviews conducted by POLITICO agriculture reporter Samuel Benson. Senate Ag Chair John Boozman (R-Ark.) said farmers have had a 'wait and see' attitude towards the tariffs, trusting the Trump administration's work to get new trade deals done to open new markets. But he said farmers are 'anxious' in light of Trump's slew of new tariff threats. 'Our farmers are in trouble,' Sen. Tommy Tuberville (R-Ala.) said last week. 'They're in bad trouble. I don't know whether there's anything we can do to save them, unless these tariffs work, and I hope we can. We're going to do everything we possibly can.' Background needed: Trump's farm state allies on Capitol Hill have stood by his ultimate goal of securing new markets for farmers — but it's not clear how long their patience will last. The push comes as a growing number of mostly House Republicans start to gently push back on Trump's targeting of critical sectors with tariffs. Is time running out? One agriculture industry lobbyist, granted anonymity to discuss concerns about the administration's tariff approach, said that Trump has about a month and a half to prove his trade plans are working before farmers start harvesting and selling their products. 'We're getting closer to harvest time,' the person said. 'We're getting to the point where those sales numbers are really going to matter, the prices are really going to matter.' TO THE LAND OF THE MAPLE LEAF: Senate Finance Committee ranking member Ron Wyden (D-Ore.) is leading a bipartisan group of senators to Ottawa this week to meet with Canadian Prime Minister Mark Carney and other senior officials, according to an advisory. The delegation — which includes Sens. Lisa Murkowski (R-Alaska), Maggie Hassan (D-N.H.) and Catherine Cortez Masto (D-Nev.) — aims to reaffirm U.S.-Canada ties as Ottawa faces 35 percent tariffs, effective Aug 1. TRADE OVERNIGHT — Trump and Xi Jinping tipped to meet ahead of or during Apec summit in South Korea, writes the South China Morning Post. — Tariff anxiety grips defense elites at Aspen conference, POLITICO reports. — Former ambassador to China: Beijing hasn't 'outplayed' Trump on trade, POLITICO Pro reports. — Meta rebuffs Brussels over AI rules, per POLITICO Pro. — Taiwan-US tariff deal will only impact import of cars from US, Taiwan News reports. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@ ddesrochers@ and ahawkins@ Follow us @POLITICOPro and @Morning_Trade.
Politico
14-07-2025
- Business
- Politico
Trump's trade war divides the EU
With help from Camille Gijs QUICK FIX — The European Union won't immediately retaliate against President Donald Trump's tariffs, a move that's prompted warnings it could strengthen Washington's position ahead of a looming deadline. — White House National Economic Council Director Kevin Hassett appeared to acknowledge that Trump's threat to hike tariffs on Brazil is not because of a trade deficit. — Trump is likely to meet with Chinese leader Xi Jinping soon, Secretary of State Marco Rubio told reporters. It's Monday, July 14. Welcome to Morning Trade! Got news tips? Suggestions? Want to grab a coffee? Hit us up at: ahawkins@ ddesrochers@ and dpalmer@ Follow us on X: @_AriHawkins, @drdesrochers and @tradereporter. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving the day EUROPE SCRAMBLES: The European Commission is holding off on immediate retaliation to avoid escalating a tit-for-tat trade war with Washington, even as Trump threatens new tariffs. But some EU officials warn that the commission's restraint risks weakening its negotiating hand — potentially giving the Trump administration greater leverage just as both sides say a broad framework for a deal is within reach ahead of the new Aug. 1 deadline. One step back: Trump announced in May that the U.S. would hike steel and aluminum duties to 50 percent, and on Saturday threatened sweeping 30 percent tariffs on imports from the EU starting next month — 10 percent higher than rates Trump announced on the bloc in April. The EU prepared countermeasures over a portion of Trump's metal tariffs targeting around $24.5 billion worth of U.S. goods, which were scheduled to go into effect this week. At a Sunday conference, European Commission President Ursula von der Leyen said the bloc would delay its retaliatory tariffs until early August, referencing the letter Trump sent the bloc on Saturday threatening the hike. Some EU lawmakers argue that holding back projects weakness — emboldening Washington and undermining the bloc's credibility at a pivotal moment — and are openly urging the commission to shift course. 'This is a wrong decision in the current situation that will not help us in our negotiations, as we have already illegal tariffs from [the U.S.] in place that are not suspended,' Brando Benifei, a senior lawmaker who chairs the European Parliament's delegation to the United States, told Morning Trade. He added that the bloc should impose the planned duties to 'show that we are serious about the countermeasures' as negotiations continue. 'Trump is trying to divide and scare Europe, but if we raise our heads now, there will be division in the American camp, even among his most important supporters, because many companies in key electoral districts would be damaged by our response,' Benifei said in the interview. Why it matters: The criticism comes as U.S. allies express shock, frustration and anger over letters from Trump outlining tariff hikes. Trump over the weekend also threatened Mexico with 30 percent tariffs in a letter mailed Saturday, likely on goods that do not comply with a trade deal signed during the first Trump term known as the USMCA. White House view: While the White House claims the letters are an effort to speed up talks with partners refusing to engage, foreign diplomats object to that line, arguing it's the Trump administration that has so far failed to clarify its priorities or red-lines. The letters are also coming as some partners express willingness to make major concessions to the Trump administration as part of negotiations. The EU as recently as Friday circulated plans to back down from taxes on digital companies, in a move that hands a victory to U.S. tech giants like Apple and Meta. 'The 30 percent thing is to put pressure on us. We got it,' one EU official granted anonymity to speak openly told Morning Trade. Von der Leyen 'will have her mandate to continue [negotiating] and internally, we are preparing for a negative or positive scenario.' What's next? The European Commission will present its latest list of countermeasures against the U.S. to a meeting of EU trade ministers today, POLITICO's Camille Gijs reports. The package — initially aimed at hitting U.S. exports worth $116.9 billion, which would target U.S. planes and cars — has been informally coordinated with key capitals, but it still needs formal backing from member states to take effect. INSIDE THE ADMINISTRATION WHY BRAZIL'S LETTER MATTERS: National Economic Council Director Kevin Hassett said that the 50 percent tariffs Trump threatened on Brazil are not necessary because of a trade deficit, but rather because of the country's treatment of former President Jair Bolsonaro. Brazil has actually run a trade surplus with the U.S. for the last several years. 'With most countries, it's really about us getting the tariffs in order, and I think this tariff on Brazil is higher because of the president's frustration with Bolsonaro,' Hassett said in an interview on Sunday with ABC's Jonathan Karl on 'This Week.' Why it matters: The acknowledgement from the White House comes as the Trump administration looks to fold a growing list of non-trade related disputes into tariff negotiations, covering issues like defense spending and digital regulations. Reminder: Bolsonaro, whom Trump has referred to as a friend, is standing trial for allegedly attempting to overturn his 2022 election loss. Bolsonaro also claimed his election was rigged, and his supporters staged an insurrection. REGULATORY REVIEW US-CHINA SUMMIT EXPECTED: Trump and Chinese leader Xi Jinping could soon meet face to face, Secretary of State Marco Rubio told reporters on the sidelines of the ASEAN Foreign Ministers' Meeting in Malaysia on Friday. 'There's a strong desire on both sides to do it,' Rubio told reporters from Kuala Lumpur. He added that 'the odds are high,' that both sides would soon agree on a date. Context: Rubio met his Chinese counterpart Wang Yi for about an hour on Friday, which he described as 'positive' and 'very constructive.' 'The last interaction of our trade representatives was quite positive, and we can build on that and other areas of potential cooperation,' Rubio told reporters, a nod toward the meeting between Trump administration officials and Chinese diplomats in London in June, when both sides agreed to temporarily scale back triple-digit tariffs, through Aug. 12. Beijing's feeling: The Chinese Foreign Ministry used similar wording in its statement praising the meeting, and said the countries 'agreed to step up communication.' HITTING PAUSE: Canada is delaying retaliatory tariffs on U.S. steel and aluminum after Trump sent a letter extending trade negotiation deadlines, even though he also threatened to impose higher tariffs. The Canadian government was preparing to double counter tariffs on July 21 — to 50 percent from 25 percent — but Trump's letter to the country has moved the prime minister off that target. On The Hill BLUEGRASS WARNING: Kentucky's Democratic Gov. Andy Beshear on Sunday slammed Trump's tariffs, saying they were not what voters in the Bluegrass State had in mind when they overwhelmingly cast their ballots in favor of Trump during the 2024 election. 'You know, the people of Kentucky, many of them voted for Donald Trump because they thought he'd make paying the bills a little bit easier at the end of the week,' Beshear told NBC's Kristen Welker on 'Meet the Press.' 'And he's just making it harder.' Stage set: Trump took home Kentucky by more than 30 percentage points in November. But Beshear, a Democrat who has claimed victory in three statewide elections in the GOP-leaning state, said the president was abandoning the message that won it over. POLITICO's Gregory Svirnovskiy has more here. TRADE OVERNIGHT — GOP warning sign in new poll: Trump's voters don't love his tariffs, POLITICO reports. — Senators put Huang on notice ahead of China trip, per POLITICO Pro. — EU must help governments to break with US cloud providers, says Netherlands, POLITICO Pro reports. — Treasury posts unexpected surplus in June as tariff receipts surge, per CNBC. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@ ddesrochers@ and ahawkins@ Follow us @POLITICOPro and @Morning_Trade.
Politico
07-07-2025
- Business
- Politico
Trump world floats tariff deadline delay
With help from Daniel Lippman QUICK FIX — President Donald Trump is increasingly expected to push back a deadline for the return of sweeping tariffs, and White House officials are offering conflicting accounts about a path forward. — The European Union is coming to terms with U.S. demands as both sides inch toward a deal to stave off 50 percent tariffs and likely retaliation. — And a coalition of major industry groups want the Trump administration to confront the EU's rules on digital competition. It's Monday, July 7. Welcome to Morning Trade! Got news tips? Suggestions? Want to grab a coffee? Hit us up at: ahawkins@ ddesrochers@ and dpalmer@ Follow us on X: @_AriHawkins, @drdesrochers and @tradereporter. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving the day AUGUST IS THE NEW JULY: The Trump administration is poised to push back its deadline to cement trade deals with dozens of countries and avoid the return of massive tariffs for another month. Letters with more details are going out to key partners starting today. Treasury Secretary Scott Bessent told CNN's 'State of the Union' on Sunday that the administration would soon be sending out letters to 100 countries 'saying that if you don't move things along, then on Aug. 1, you will boomerang back to your April 2 tariff level.' In the interview, Bessent said that the August target is 'not a new deadline' for negotiations. 'We are saying this is when it's happening. If you want to speed things up, have at it. If you want to go back to the old rate, that's your choice,' Bessent said. Trump floated the delay in remarks to reporters on Air Force One late Friday, saying 'I signed some letters and they'll go out on Monday,' to twelve countries, and that tariffs would begin being collected the first of next month. He followed that up with a post on Truth Social late Sunday, which said that 'Letters, and/or Deals, with various Countries from around the World' will be delivered starting at noon today. But unlike Bessent's reiteration of the 'April 2 tariff level,' the president has suggested new tariff rates could be coming, which he said could be as high as 70 percent. Meanwhile, Commerce Secretary Howard Lutnick told reporters aside Trump on Sunday that 'the president is setting the rates and the deals right now.' A spokesperson for the White House declined to clarify to Morning Trade whether countries would be receiving new rates. Why it matters: The delay underscores the administration's difficulty in locking down even skeletal trade deals with key partners — and the conflicting accounts from Trump and his inner circle about what tariff levels are expected to come into force next month suggests persisting uncertainty over the path forward. Not so fast: Even with the new Aug. 1 deadline, administration officials suggest there's still some wiggle room, at least for key countries — though they emphasized Trump has the final call. 'There are deadlines, and there are things that are close, and so maybe things will push back past the deadline, or maybe they won't,' Kevin Hassett said in an interview on CBS' 'Face the Nation' on Sunday. 'In the end, the president's going to make that judgment.' Bessent in a separate interview with 'Fox News Sunday' hinted at the Trump administration's broader strategy with the new deadline. 'There's a lot of congestion going into the home stretch and, as a part of the trade team, what's great about having President Trump on our side is he's created maximum leverage,' Bessent said. Scott Lincicome, vice president of general economics at the Cato Institute, a free market think tank, told Morning Trade a delay should come as no surprise, given how 'impossible' it would have been to make dozens of trade deals so quickly. The delay 'means at least another month of uncertainty, a 'best case' of historically high U.S. tariffs, and thus significant headwinds for the U.S. economy going into the Fall,' Lincicome said. BRUSSELS CORNER US-EU DEAL INCHES CLOSER: The European Union is weighing a provisional trade deal with the United States that would maintain a 10 percent tariff on most exports, the European Commission told EU ambassadors. In addition to the baseline tariff, conversations would continue on providing relief to specific industry sectors such as cars, top Commission officials were cited as saying, POLITICO Europe reported on Friday. One step back: The EU executive reported back after a crucial round of talks in Washington on Thursday, in which Trade Commissioner Maroš Šefčovič sought to head off a threat by Trump to impose a 50 percent tariff on all European goods. Behind the scenes scramble… Commerce Secretary Howard Lutnick was supposed to join that meeting last week but had already left town to go on vacation with his family in Italy, POLITICO Playbook reported Friday. Instead, Bessent said he was meeting with the EU. Bessent, meanwhile, canceled a family July 4 trip to Wimbledon and the Henley Royal Regatta to get Trump's tax and spending legislation across the finish line and work on trade deals, the person familiar with the matter confirmed to Morning Trade. 'Secretary Lutnick met his wife and family for a July 4th trip,' a Commerce spokesperson said in a statement to Playbook Friday. 'He has been on nonstop calls working for the American people and plans to be back in DC this weekend.' DIGITAL FOCUS NEEDED: As the transatlantic partners near a deal, a coalition of industry groups is asking the Trump administration to confront the EU's rules on digital competition. The letter, dated Thursday, is being led by the National Foreign Trade Council, whose board members include Walmart, Visa and Ford Motors. It's also signed by the U.S. Chamber of Commerce, and several major tech groups. 'Any deal that does not explicitly address these issues would provide tacit approval to the EU and other governments that they are free to continue targeting U.S. innovators with discriminatory regulations, taxes, and fines,' the groups wrote in a letter to Trump. Background needed: Opponents of such measures, including the Trump administration and major U.S. industry groups, are ramping up criticism of the EU's tech regulation. Your host reported over the weekend that negotiators have discussed the Digital Services Act despite claims from some EU officials that tech regulations were off the table in talks. The DSA imposes strict obligations on platforms with more than 45 million monthly users to protect users and limit the spread of illegal or harmful content. Talks, however, have not covered the Digital Markets Act, which sets competition rules for the world's largest tech firms, Olof Gill, the EU spokesperson for trade and economic security told a group of reporters, including your host, last week in Brussels. REGULATORY REVIEW US-CHINA LIFT EXPORT CURBS: Beijing and Washington are following through on an agreement struck last month in London to lift restrictions on exports of items essential for industrial production, as both sides look to cool a global trade war. 'The Chinese side is examining and approving applications for export licenses for eligible controlled items in accordance with the law. The U.S. side has also taken corresponding actions to cancel a series of restrictive measures against China, and the Chinese side has been informed of the relevant information,' a Chinese Commerce Ministry spokesperson said in a statement Friday. TRADE OVERNIGHT —'He likes the game too much': Why Trump isn't sweating his lack of trade deals, POLITICO reports. — Beijing and Washington lift export restrictions on key products, POLITICO Pro reports. — Cross-border freight dropped sharply in April. Some experts say tariffs are to blame, per POLITICO. — Trump leaves 'America First' behind in preparations for World Cup, POLITICO reports. — Trump threatens 10 percent tariff increase on BRICS-aligned nation in a post on Truth Social. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@ ddesrochers@ and ahawkins@ Follow us @POLITICOPro and @Morning_Trade.
Politico
30-06-2025
- Business
- Politico
Canada cans digital tax after Trump threats
QUICK FIX — Canada's decision to withdraw its digital services tax over President Donald Trump's trade threats will likely embolden the president's strategy of using tariffs to extract broader concessions from countries. — The United States and India are eyeing later this fall for a comprehensive agreement on trade as Washington's demands weigh on negotiations. — The Trump administration secured an exemption from a global minimum tax plan, while the U.S. dropped its threatened so-called revenge tax. It's Monday, June 30. Welcome to Morning Trade! Got news tips? Suggestions? Want to grab a coffee? Hit us up at: ahawkins@ ddesrochers@ and dpalmer@ Follow us on X: @_AriHawkins, @drdesrochers and @tradereporter. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. Driving the day CANADA CTRL+Z: In a bid to revive trade negotiations with the Trump administration, Canada said late Sunday it will drop its digital services tax on major technology companies like Apple, Amazon and Google — a levy that was set to begin raking in billions from U.S. firms. 'Canada is engaged in complex negotiations on a new economic and security partnership with the U.S.,' Canadian Finance Minister François-Philippe Champagne said in an X post. 'Rescinding the DST will allow the negotiations to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians.' Canadian Prime Minister Mark Carney and President Donald Trump will resume trade discussions with the goal of reaching a deal by July 21, according to a statement from Canada's finance ministry. The reversal comes after Trump on Friday declared he would be 'terminating' all trade discussions with Canada, effective immediately, because of the 3 percent tax on certain digital revenues earned in the country, and that he would announce new tariffs on Canada within the next seven days. (Canadian Prime Minister Mark Carney and Trump had previously agreed to secure a deal by July 16.) The president reiterated earlier Sunday that trade talks with Canada would not return 'until such time as they drop certain taxes,' in an interview on Fox News' Sunday Morning Futures With Maria Bartiromo. Why it matters: Canada's decision to drop its digital services tax will likely embolden the Trump administration's broader approach to trade negotiations, which is to use tariffs not only as a tool to boost domestic manufacturing and revenue, but as a lever to extract concessions on a host of unrelated issues, particularly tech regulations. It comes after the administration asked South Korea to shelve so-called antitrust proposals and as it seeks to revise digital services measures in the United Kingdom and the European Union. Industry view: The move is a relief for major technology companies that are increasingly getting caught up in Trump's trade war, and removes a long-running source of strain from the Trump administration. Prior to the rescindment, the first payment was scheduled to be today. The tax charges retroactively from January 2022. In addition to those payments, U.S. companies would have faced up to $2.3 billion worth of annual losses, per the Computer & Communications Industry Association Research Center. 'We welcome the Canadian government's decision to withdraw this ill-advised measure, and we hope officials will provide guidance for businesses as the rescission takes place,' Megan Funkhouser, a senior director at the Information Technology Industry Council, which counts Apple, IBM, Microsoft and Nvidia as members, told Morning Trade. INSIDE THE ADMINISTRATION DELHI-CATE TALKS: Meanwhile, Washington and New Delhi continue to make progress toward the first phase of a trade deal, with the expectation that a more comprehensive agreement could come later in the fall, writes POLITICO's Dan and Megan Messerly. At an event at the White House on Friday, Trump teased that, 'I think we're going to reach a deal where we have the right to go in and trade' in India. He added, 'We're looking to get a full trade barrier dropping, which is unthinkable, and I'm not sure that that's going to happen, but as of this moment, we've agreed to that.' Key point: The White House has projected a rosy image of talks with the country, after reaching agreements on some agricultural issues, energy purchases and non-tariff barriers. But officially inking a deal has proven difficult, people close to the negotiations say, because of all the things the Trump administration is asking India to do to lower its trade barriers, while only offering to give up some of its newly imposed tariffs in return. 'Nothing riles Indians more than the idea that their government was bullied by a foreign leader,' said Syed Akbaruddin, India's former ambassador to the United Nations. 'A trade bargain that could have been a win-win deal now risks being portrayed by those who oppose it as a tribute, not a partnership.' By the numbers: India has some of the highest tariffs of any major economy in the world, with an average rate of around 17 percent. Its government, in particular, has long sought to protect the country's millions of subsistence farmers, who have outsized political clout. Reminder: India was one of the first countries to begin trade negotiations with the U.S., launching talks in February. While visiting India in late April, Vice President JD Vance announced the two sides had 'officially finalized the Terms of Reference' for the negotiations. REGULATORY REVIEW TIT FOR TAX: G7 countries have agreed to exempt the United States from applying a 15 percent minimum corporate tax rate, the Canadian G7 presidency said in a statement Saturday night. Deal reached: The industrialized economies appeared to cave in to shield their own firms from Washington's threat of retaliation. The deal comes after the U.S. agreed to drop a so-called revenge tax against other countries that impose allegedly 'discriminatory' levies on U.S. firms, known as Section 899 from a sweeping domestic policy megabill. Reminder: Lawmakers came under pressure from foreign officials and U.S. manufacturers to ease the mooted tax amid fears that it would have dented foreign investment in the country. 'INEFFECTIVE INSTRUMENT': The Bank for International Settlements issued a sharp rebuke of the U.S. administration's trade policies, urging it to confront its stubborn fiscal deficit instead of resorting to import duties to correct global trade imbalances. 'Even if there were merits to cutting trade deficits and boosting domestic production at the expense of imports, broad-based tariffs are an ineffective instrument for doing so,' the BIS, often dubbed the central bank for central banks, said in its annual economic review. At the same time, Trump's protectionist policies have taken a toll on the global economy's growth prospects. In its latest outlook, the International Monetary Fund warned that trade tensions could lower economic growth to 2.8 percent this year, from 3.3 percent last year. POLITICO Europe's Carlo Boffa has more here. TRADE OVERNIGHT — New Senate megabill text eliminates tariff exemption for low-value packages, per POLITICO Pro. — Megabill in limbo with GOP senators locked in last-minute talks, POLITICO Pro reports. — Treasury fills out key policy roles, per POLITICO Pro. — Moolenaar urges Lutnick to box China out on AI, POLITICO Pro reports. — Trump plans executive orders to power AI growth in race with China, per Reuters. THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@ ddesrochers@ and ahawkins@ Follow us @POLITICOPro and @Morning_Trade.
