US President Donald Trump has backed away — for now — from imposing steep levies on the European Union, two days after he threatened the bloc with 50 p.c tariffs.
On Sunday, Trump agreed to increase his deadline for commerce talks till July 9, from the June 1 deadline he set on Friday, after European Fee President Ursula von der Leyen stated the bloc wanted extra time to “attain deal”.
Von der Leyen reportedly informed Trump throughout a telephone name that the EU wanted extra time to come back to an settlement and requested him to delay the commerce duties till July, the deadline he had initially set when he introduced his “reciprocal” tariffs on nearly all international locations around the globe in April.
Trump stated that he had granted the request, and that von der Leyen informed him, “We are going to quickly get collectively to see if we will work one thing out.” Von der Leyen stated in a social media publish that the EU was prepared to maneuver rapidly in commerce talks.
Throughout a visit to Vietnam on Monday, French President Emmanuel Macron stated that he hoped Washington and Brussels might obtain a take care of the bottom tariffs potential. “The discussions are advancing,” he informed reporters.
The US president’s newest salvo comes amid Washington’s stop-and-start world commerce battle that kicked off in April. Trump’s strikes have unnerved markets, companies and customers and raised fears of a world financial downturn.
However whereas his method has yielded a commerce take care of the UK, and negotiations are believed to be progressing with a spread of different nations — from India to Vietnam to Japan — key sticking factors complicate the prospects of an settlement with the EU.
Right here’s what the tiff is about, and why the US and EU are struggling to succeed in a commerce deal:
What’s the backdrop?
Trump’s latest broadside in opposition to the EU was prompted by the White Home’s perception that negotiations with the bloc should not progressing quick sufficient. “Our discussions with them are going nowhere!” Trump posted on Truth Social.
“Due to this fact, I’m recommending a straight 50% Tariff on the European Union, beginning on June 1, 2025. There is no such thing as a Tariff if the product is constructed or manufactured in the US,” he wrote final Friday.
By Sunday, nonetheless, Trump had modified course. He welcomed von der Leyen’s assertion that the bloc was prepared to barter however that it wanted extra time. He added that it was his “privilege” to delay the elevated tariffs.
Trump stated, “[von der Leyen] stated she desires to get right down to critical negotiation. We had a really good name … she stated we are going to quickly get collectively and see if we will work one thing out,” he informed reporters.
Trump is considered against the thought of mutually reducing tariffs to zero – an EU proposal. The US president has insisted on preserving a baseline 10 p.c tax on most imports from America’s buying and selling companions.
On Might 8, the UK agreed to a trade deal that stored Trump’s 10 p.c reciprocal tariff charge in place.
EU commerce chief Maros Sefcovic stated the European Fee – the EU’s government arm – stays dedicated to securing a deal that works for each side. However he warned that EU-US commerce “should be guided by mutual respect, not threats.”
In 2024, EU exports to the US totalled about 532 billion euros ($603bn). Prescription drugs, vehicles and auto elements, chemical substances and plane had been among the many largest exports, in response to EU knowledge.
What’s the EU providing?
Final week, the US rejected a proposal despatched by the European Fee. The EU had supplied to take away tariffs on industrial items, increase entry for some US agricultural merchandise and co-develop AI knowledge centres, Bloomberg reported.
It additionally proposed enhancing financial cooperation in areas like shipbuilding and port infrastructure, in addition to by establishing an EU-US power partnership masking fuel, nuclear energy and oil.
In trade, Brussels desires the Trump administration to have extra flexibility on reducing the ten p.c baseline tariff — together with by probably reducing it in phases over time.
Whereas the EU has stated it desires to discover a negotiated answer, it has additionally been making ready to retaliate if needed.
Member states have authorized a 50 p.c tariff on a batch of US merchandise value 21 billion euros ($23.8bn), together with maize, wheat and clothes, which is able to kick in on July 14 with no deal.
The bloc can also be making ready tariffs on different imported merchandise totalling 95 billion euros ($107.8bn), focusing on industrial items like Boeing plane and vehicles, in addition to bourbon.
What does the US need?
Trump has lengthy accused the European Union of “ripping off” the US, and is decided that Brussels will undertake measures to decrease its 198.2-billion-euro ($225bn) items commerce surplus with the US.
Washington has repeatedly raised considerations over Europe’s value-added tax, in addition to its rules on IT and meals exports. Trump contends that these controls act as de facto commerce obstacles to the EU.
For his half, Sefcovic not too long ago informed the Monetary Instances that he desires to slash the US-EU commerce deficit by shopping for extra US fuel, weapons and agricultural merchandise.
As well as, the bloc is reportedly open to lowering its dependence on Chinese language exports and on erecting tariffs in opposition to subsidised Chinese language exports, which Trump is eager on.
Sefcovic and his US counterpart, Jamieson Greer, are scheduled to satisfy in Paris subsequent month to debate methods of de-escalating the continuing US-EU commerce dispute.
How badly would Trump’s tariffs have an effect on each economies?
In 2024, the EU exported 531.6 billion euros ($603bn) in items to the US and imported merchandise value 333 billion euros ($377.8bn), leading to a commerce surplus of virtually 200 billion euros ($227bn).
On the flip aspect, the US runs a surplus of greater than 109 billion euros ($124bn) in providers as of 2023, with notable IT exports, led by massive American tech corporations, expenses for mental property and monetary providers.
Trump’s tariffs would, in flip, hit each economies laborious. In keeping with a 2019 examine by the Worldwide Financial Fund, a full-scale US-EU commerce battle might value 0.3-to-0.6 p.c of gross home product (GDP) on each side.
