EU hits pause on US trade deal as it seeks clarity
Frustrated European officials have pressed for clarification on how US President Donald Trump’s announcement of a 15 percent global tariff on imports will affect the trade deal they signed with Trump, as EU lawmakers stalled on approving the deal until they get clarity.
The European Parliament’s trade committee postponed a committee vote on approval after Trump said he would impose the new tariff after the US Supreme Court struck down his 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 percent 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.
“Now we’re just saying to the United States: It’s up to you to make it clear to us which path you’re taking to honor the agreement,” Gill said.
The US-EU agreement calls for a 15 percent cap on tariffs on most European goods imports, while tariffs on US industrial goods will 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 that helped Europe avoid recession last year.
Bernd Lange, chairman of parliament’s trade committee, said the new 15 percent rate announced on Saturday would exceed the agreed ceiling on tariffs as it would be applied in addition to previous tariffs.
Lawmakers postponed the 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, the UK agreed with the US on a maximum tariff of 10 percent, while India agreed on 18 percent and Vietnam on 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.
US Trade Representative Jamison Greer said in a statement on US broadcaster CBS on Sunday that the administration had made clear to negotiating partners that Trump intends to impose tariffs whether or not the Supreme Court rules against him, and that “there will be tariffs whether we win or lose.”
He said bilateral agreements “are good agreements, we expect them to stand by them, and we expect our partners to stand by them too.”
Atakan Bakiskan, US economist at Berenberg Bank, said the shift from country-specific tariffs to a flat 15 percent global tariff “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.
“Uncertainty regarding trade policy seems to be here to stay and continues to put pressure on the US economy,” Bakiskan said.
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