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The Independent
09-04-2025
- Business
- The Independent
Bow ties, handkerchiefs and ice cream: How the EU is set to respond to Trump's tariffs creatively
The EU is ready to hit back at Donald Trump's bombshell tariffs - but instead of simply striking back hard, Brussels may be looking to deploy a more creative response. As part of his sweeping round of levies, the US president landed the EU with a 20 per cent blanket tariff on all imports, just weeks after announcing damaging 25 per cent tariffs on automotive imports. Brussels is now considering hitting the US with tariffs targeting products that will particularly impact Republican heartlands, affecting billions of dollars of exports from America's so-called 'red states', according to an internal document seen by Politico. Levies of up to 25 per cent could be placed on products from Trump-supporting red states - such as ice cream, cigarettes and soybeans - which are most reliant on exports across the Atlantic. Tariffs being considered by the European Commission would be placed on a broad range of exports worth roughly €22.1 billion based on the EU's 2024 imports. Duties of 25 per cent on steel, meat, white chocolate and polyethylene would be introduced in May, before another 25 per cent duty on almonds and soybeans lands on December 1. Iron and orange juice are also among the products that could be hit if the countries vote for the new policy on Wednesday (9 April). But trade experts in Brussels are seeking to strike industries and areas where Mr Trump has a strong supporter base. According to Politico's analysis of 2024 trade data, around $13.5 billion of exports from red states will be hit. Perhaps the most significant example is soybeans, the most valuable item on the EU's list. The US is the world's second-largest exporter with around 83 per cent coming from Louisiana, the home and solidly red state of House Speaker Mike Johnson. Beef from Kansas and Nebraska, car parts from Michigan, ice cream from Arizona, handkerchiefs from South Carolina, ties, bow ties and cigarettes from Florida, wood products from North Carolina, Georgia and Alabama, and poultry from Louisiana are also being targeted by Brussels, Politico adds. Electric blankets from Alabama, washing machines from Wisconsin, and pasta from Florida and South Carolina would also be impacted. Mr Trump has shown no signs of backing down from his tariff warfare, despite a significant response from China. When Brussels offered a 'zero-for-zero' tariff scheme on industrial goods such as cars, drugs and chemicals, Mr Trump refused, demanding that the EU buy $350 billion worth of US energy products to make the trade deficit 'disappear'.
Boston Globe
13-03-2025
- Business
- Boston Globe
Trump threatens 200% tariff on Champagne and wine from Europe
The EU's tariff plan came in response to a set of US tariffs on steel, aluminum, and other related products that took hold on Wednesday. Advertisement The 27-nation bloc explained that it would react to America's steel and aluminum tariffs in two waves: First, with tariffs as high as 50 percent on US products, including Harley-Davidson motorcycles and Kentucky bourbon, which will take effect on April 1; and second, a series of measures in mid-April that would target farm products and industrial goods that are important to Republican districts. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up European leaders have made it clear that they would prefer not to enact those measures, and would like to come to an agreement with Trump instead. 'Tariffs are taxes,' Ursula von der Leyen, the president of the European Commission, the bloc's executive arm, said in a statement on Wednesday. But with little progress toward a deal, EU leaders decided to hit back in politically sensitive product categories, hoping to inflict enough pain to drive Americans to the negotiation table. European officials had anticipated that Washington might react, and some vowed on Thursday not to cave under that pressure. 'We will not give in to threats,' Laurent Saint-Martin, France's foreign trade minister, said in a post on the social platform X. Trump 'is escalating the trade war he chose to unleash,' he added. The European Commission, which most directly drives trade policy for the economies in the bloc, did not have an immediate comment on Trump's post. Advertisement But Olof Gill, a spokesperson for the commission, said Trade Commissioner Maros Sefcovic had reached out to his American counterparts after the EU's announcements Wednesday. Calls were 'being prepared,' he said. This is not the first time the spirits and alcohol industry has been caught in a trans-Atlantic trade war. Less extreme tariffs were placed on liquor and other alcohol during Trump's first term, and the industry's recovery from that hit has been long and grueling. Back then, the president threatened Champagne with tariffs, but did not follow through. While it is not clear how much it mattered in that case, Bernard Arnault, France's richest man and head of the LVMH Moët Hennessy Louis Vuitton luxury empire, is a longtime friend of Trump's. He attended the president's recent inauguration. Arnault's company is home to brands including Dom Pérignon, Krug, and Veuve Cliquot. This time around, a range of alcohol industry executives have been lobbying in Washington, Brussels, and other European capitals to be spared — and have expressed alarm that they are once again caught in the crossfire. Ulrich Adam, director general of the trade group spiritsEurope, called Trump's tariff threat on European alcohol a 'shocker.' The group aims 'to get spirits out of the middle of these unrelated disputes,' he added. There seems to be little hope of an immediate reprieve. Trump stressed that the tariffs 'will be great for the wine and Champagne businesses in the U.S.' Champagne, technically, is produced only in a specific region in France. About 16 percent of its total exports go to the United States, based on industry data from 2023, making America the largest importer of the sparkling wine. Advertisement This is the second time this week that Trump has threatened to rapidly escalate a trade war against a close ally. On Tuesday, Trump threatened to double the tariffs on Canadian steel and aluminum after the province of Ontario responded to his previous tariffs by putting a surcharge on electricity it exported to the United States. Within hours, Ontario had suspended its surcharge, and Trump also walked back his threats. On Wednesday, he proceeded to tax Canadian steel and aluminum at the same 25 percent rate as other countries. Governments have varied their responses to Trump's tariff threats. China, the European Union, and Canada have quickly answered Trump's tariffs with levies of their own, encouraged by their domestic political constituencies to fight back or emboldened by leverage based on the size of their economies. But governments in Australia, Brazil, Britain, Japan, and Mexico have chosen not to retaliate, at least for now, as they seek a deal with Trump. Commerce Secretary Howard Lutnick warned other countries in an interview on Bloomberg TV on Thursday against retaliating against the United States. 'If you make him unhappy, he responds unhappy,' Lutnick said. Lutnick said that some countries, like Britain and Mexico, had thoughtfully examined how they do business with the United States. But for countries that respond with further tariffs, 'the president's going to deal with them with strength and with power,' he threatened. This article originally appeared in
Euronews
05-03-2025
- Business
- Euronews
How can the EU unlock up to €800bn for its ‘rearmament plan'?
The EU has officially entered its "rearmament era" and is now ready to step up its efforts to support Ukraine in the short term and ensure its strategic autonomy to defend itself in the long term. On Thursday, during a special meeting of EU leaders in Brussels, the 27 heads of state and government will discuss the five-point response plan, dubbed "REARM Europe", proposed by the EU Commission on Tuesday. The plan aims to mobilise around €800 billion over the next four years, the bulk of which will come from member states increasing their national spending on defence and security. 'If member states would increase their defence spending by 1.5% of GDP on average (which is the cap established by the Commission in additional defence spending per year), this could create fiscal space of close to €650 billion over a period of four years,' von der Leyen told reporters on Tuesday. The remaining €150 billion would come from a new defence instrument, allowing the Commission to borrow from capital markets to issue bonds and lend to member states. This plan mirrors how the EU raised funds for the COVID-19 recovery with the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) , though this time, the funds would be distributed as loans rather than grants, based on national procurement plans for defence products throughout the decade. 'We're talking about [funding] pan-European capabilities domains like for example, air and missile defence, the artillery systems, missiles and ammunition, drones and anti-drone systems, but also to address other needs from cyber to military mobility," the Commission president said. The new instrument will be an off-budget instrument, implying joint borrowing that would eventually have to be repaid. 'In the short term, I don't think we have an alternative to some debt funding. We will have to have the debt funding to ensure that there is tax smoothing, that there's spending smoothing and to actually get political majorities,' Guntram Wolff, senior fellow at the economic think-tank Bruegel, told Euronews. 'But it should be clear that it cannot be a permanent solution,' Wolff added. A key pillar of von der Leyen's rearmament plan is giving member states more fiscal leeway to increase defence spending by activating the so-called national escape clause of the Stability and Growth Pact, as announced at the Munich Security Conference last month. The pact, adopted last year, imposes strict fiscal rules requiring member states to keep debt below 60% of GDP and deficits under 3%. Countries such as Poland and the Baltic states have long pushed for looser rules to allow higher defence spending without penalty. The escape clause can be triggered under exceptional circumstances that "lead to a major impact on public finances," though von der Leyen did not specify how spending by highly indebted countries like France and Spain would be controlled. Additional defence expenditure of up to 1.5% of GDP will be exempted from the EU's spending limits for four years, but beyond that, increased defence spending must fit within national budgets. 'We need to see European efforts beyond the EU. If the EU takes this step alongside the UK and Norway, we will have greater leverage in defence procurement and support for Ukraine,' Maria Martisiute, policy analyst at the European Policy Centre, told Euronews. Plan C, D, E: more private capital and a flexible EIB mandate and EU budget The Commission has also proposed three additional measures: mobilising more private capital, adapting the European Investment Bank's (EIB) mandate, and incentivising defence-related investments in the EU budget. In the short term, the EU is encouraging member states to redirect funds from cohesion policy programmes—which aim to bridge economic disparities between EU regions—to defence and security. Unlocking the full potential of the Capital Markets Union will also be "indispensable" for von der Leyen's plan. "We need to ensure that the billions of savings from Europeans are invested in markets inside the EU," she told member states in a letter sent on Tuesday morning. The bloc is not short of capital: European households save €1.4 trillion a year, compared with €800 billion in the US - but €300 billion of Europeans' savings flow into markets outside the EU every year. To address this, the Commission will present by 19 March a communication on a European Savings and Investment Union to incentivise risk capital and promote seamless capital flows across the EU. The final pillar of the plan is to broaden the mandate of the European Investment Bank (EIB). The EIB has already changed its policy on financing dual-use companies - i.e. those with less than 50% of their revenues coming from defence-related activities - and is currently examining how to extend its scope of financing while safeguarding its lending capacity. 'In a time of rising defence expenditures, that's quite a constraint because many dual use companies cannot be funded by the EIB (...), so I think that there is scope to change the mandate of the EIB and use the EIB as a vehicle to fund companies that have a severe gap in in their funding from private banks and from capital markets,' Wolff said. Are there other proposals to improve Europe's defence capabilities? The Commission's proposals respond to a Europe facing "a clear and present danger on a scale that none of us have seen in our adult lifetime." However, additional long-term options could include boosting defence spending in the next EU budget or creating a "rearmament bank." The current Multiannual Financial Framework (2021-2027) allocated only €15 billion (1.2% of the MFF) to security and defence. EU-funded initiatives include the Act in Support of Ammunition Production (ASAP), the European Defence Fund (EDF), and EDIRPA. The Commission has also proposed the European Defence Industry Programme (EDIP) for post-2025 to enhance capabilities. Yet the EU's financial watchdog has warned that EDIP lacks the budget to meet its objectives. At least €500 billion will be needed over the next decade to close key capability gaps. Commissioner Andrius Kubilius has suggested allocating nearly €100 billion for defence investment in the next Multiannual Financial Framework (2028-2034). Negotiations on the next MFF will begin this summer, but those funds will not be available in the short term. Meanwhile, the EU is in discussions with non-EU countries such as the US and UK to establish a "rearmament bank" to significantly boost defence spending. This new bank would not impact national borrowing capacity, as it would issue triple-A bonds backed by shareholder nations. This would enable rapid investment in defence procurement and technology without adding to public debt.
Euronews
09-02-2025
- Business
- Euronews
Kaja Kallas congratulates Lebanon after PM Nawaf Salam announces new government
The EU's foreign policy chief has issued a statement congratulating Lebanon after Prime Minister Nawaf Salam formed the country's first fully-fledged government since 2022. In her statement, Kaja Kallas said she wished the new administration"full success in delivering the aspirations of the Lebanese people." "The EU reaffirms its steadfast support for the Lebanese people and in particular for the rebuilding of state institutions capable of fulfilling their missions at the service of all citizens." President Joseph Aoun announced on Saturday that he had accepted the resignation of the former caretaker government and signed a decree with Salam on the formation of the new government. Salam's cabinet of 24 ministers, split evenly between Christian and Muslim sects, was formed less than a month after he was appointed and comes at a time where Lebanon is scrambling to rebuild its battered southern region and maintain security along its southern border after a devastating war between Israel and the Hezbollah militant group. A US-brokered ceasefire, which has largely held, ended the fighting in November. Lebanon is also still in the throes of a crippling economic crisis, now in its sixth year, which has battered its banks, destroyed its state electricity sector and left many in poverty unable to access their savings. Salam, a diplomat and former president of the International Court of Justice, has vowed to reform Lebanon's judiciary and economy and bring about stability in a country which has faced numerous economic, political and security crises for decades. Though Hezbollah did not endorse Salam as prime minister, the Lebanese group did engage in negotiations with the new prime minister over the Shiite Muslim seats in government, as per Lebanon's power-sharing system. Lebanon's new authorities also mark a shift away from leaders that are close to Hezbollah, something which was pushed for by the United States which took on an unusually direct role in the formation of the new administration. The US deputy envoy for Middle East peace, Morgan Ortagus, said on Friday that any Hezbollah involvement in the new cabinet would be a "red line" for Washington and prevent Lebanon from accessing reconstruction funds. After talks with Lebanon's prime minister and parliament speaker, Ortagus said she hoped Lebanese authorities were committed to making sure that Hezbollah isn't a part of the new government in any form.
