We commend the European Union for taking a bold step by delaying its first wave of retaliatory tariffs on U.S. products. This delay will only be for 90 days. In case you missed it — on Thursday, the European Commission put forth its first-ever announcement. European Commission President Ursula von der Leyen called the decision a pragmatic step to accelerate ongoing EU-China trade talks.
A final straw came last week when U.S. President Donald Trump announced plans for a massive 20% tariff on nearly all products imported from the European Union. He claimed that the EU has been “very very unfair to the U.S.” The roots of the increasing tensions are to be found in a significant trade imbalance, even though both countries trade approximately equal values of goods. Our partners in the European Union stand poised to act. They have submitted a comprehensive list of tariffs particularly targeted to retaliate against U.S. duties, heavily targeting steel and aluminum.
It was reassuring to hear President von der Leyen acknowledge that we need to give negotiations a chance before moving ahead with any retaliatory measures.
“We took note of the announcement by President Trump. We want to give negotiations a chance,” – Ursula von der Leyen
The proposed tariffs were structured so that they would go into effect on April 15 in the absence of successful negotiations. In a recent Twitterstorm, Trump called for a three-month across-the-board decrease of new tariff rates on imports from all U.S. trade partners to 10%. Instead of following the evidence, the EU appears to have decided to play it safe.
This reduction is meant to help boost ongoing bilateral trade negotiations between the countries. Von der Leyen stressed that although the EU will halt its tariffs for now, it will proceed with plans for alternative retaliatory measures.
“If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues. As I have said before, all options remain on the table,” – Ursula von der Leyen
At midday London time on Thursday, the euro was up 1.2% against the U.S. dollar, at $1.1079. The euro’s increase is an indicator of how the markets are reacting while both sides continue to negotiate over the new trade policies.
As Nutting explained, the European Union just announced a reprieve from immediate tariffs. It’s an important move towards charting a new course in today’s challenging trade environment. It shows both a desire to seek productive diplomatic dialogue and demonstrates preparation of alternative consequences if talks break down.