EU hits pause on US trade deal as it seeks clarity over latest Trump tariff maneuver
The European Parliament’s trade committee postponed a committee vote on approval after Trump said he would impose new tariffs and the US Supreme Court rejected Trump’s use of emergency powers law to set new import duties. Trump then invoked another section of trade law to justify the imposition of the 15% global rate, which takes effect Tuesday.
The EU’s position is expressed in five words: “A deal is a deal,” said Commission spokesman Olof Gill. “So now we say to the United States: It is up to you to show us clearly what path you are taking to comply with the agreement.”
The US-EU agreement called for a 15% cap on tariffs on most European goods imports, while tariffs on US industrial goods were to be reduced to zero. While the agreement places a burden on consumers and businesses compared to the previous average tariff increase of 4.8 percent, it also gives businesses certainty so they can plan; This was credited as a factor in helping Europe avoid recession last year.
Bernd Lange, chairman of parliament’s trade committee, said the new 15% rate announced on Saturday would exceed the agreed ceiling on tariffs as it would be applied in addition to previous tariffs. Legislators postponed a committee vote on the agreement scheduled for Tuesday.
Other trade agreements with individual countries, including Brazil, India and the United Kingdom, were also fraught with questions. For example, while the UK agreed with the US on a maximum customs duty of 10 percent, India agreed to 18 percent and Vietnam 20 percent. Although the Supreme Court decision did not directly affect bilateral agreements, they were negotiated using the threat of imposition of now-defunct tariffs as leverage. But reopening those agreements could backfire because Trump has made clear that he would impose tariffs under laws other than the one that the Supreme Court has said it cannot enforce.
U.S. Trade Representative Jamison Greer said Sunday on U.S. network CBS’s “Face the Nation” that the administration has made clear to negotiating partners that Trump intends on tariffs whether or not the Supreme Court rules against him, adding that “whether we win or lose, there will be tariffs.” He said bilateral agreements “are good agreements, we expect to stand by them, we expect our partners to stand by them too.”
Atakan Bakiskan, a US economist at Berenberg Bank, said moving from country-specific tariffs to a fixed global tariff of 15% “will have significant impacts elsewhere”. The new tariff means a reduced rate for some countries, such as Brazil, which faces a cut of about 15 percentage points, and China, which faces a decrease of about 10 percentage points.
According to the law Trump is relying on, these latest tariffs will only be valid for 150 days unless Congress decides to extend them. Trump could use this time to seek other legal provisions that would support his actions. While the uncertainty is hitting European companies, it is also putting pressure on the U.S. economy, where consumers and companies pay tariffs on goods purchased abroad. Bakshikan said, “Uncertainty regarding trade policy seems to be here to stay, which causes continued pressure on the US economy.” he said.
