Now, thanks to former President Donald Trump, the transatlantic alliance is staring down a new set of trade tensions. Then came his dramatic 50% steel import tariff, terrifying consumers with the prospect of significantly higher costs on big ticket items. For one, Trump has shown little interest in negotiating. EU officials continue to maintain that the door remains ajar for talks and are reportedly drawing up retaliatory measures in the event that’s required.
At the end of last week, Trump slapped a major tariff on steel imports. This decision has created widespread concern within the business community about future increased costs. Trump’s return to the White House – this time with a wider strategy in mind – would be to impose tariffs. This broad strategy encompasses an expansive list of tariffs and trade levies targeting multiple countries and industries.
This new round of tariffs has been instituted while the United States is negotiating with the EU. The EU’s response has been quiet but strong. Olof Gill, a spokesperson for the EU, stated that negotiations must lead to a “balanced outcome” to avoid further escalations.
“In the event that our negotiations do not lead to a balanced outcome, the EU is prepared to impose countermeasures, including in response to this latest tariff increase,” – Olof Gill
Even with the threat of these countermeasures, it’s hard to overstate how seriously the EU is taking the current trade landscape. Additionally, Gill noted that these countermeasures “automatically take effect on July 14 or earlier,” should discussions fail to yield satisfactory results.
Trump’s administration has been setting such an upsetting, scary, erratic, precedent of tariff increases and reversals in the past few months. Yet recent tariffs announced by the US and EU have added tremendous uncertainty to international trade. All of these actions combined have resulted in an unstable, erratic environment for international trade.
The already tricky situation is compounded by a 90-day period of stay meant to allow for good-faith negotiations. Precisely when this pause will end is up in the air. EU officials are optimistic that such a timeframe can bring about a more positive and constructive dialogue. To placate the environmentalists, they brought forth a “zero for zero” approach into the negotiations. This strategy focuses on reciprocal concessions and removal of tariffs.
Trump’s already tried to pooh-pooh these proposals. EU officials are set on testing the limits of flexibility for negotiation. Gill stated that if discussions are to proceed effectively, they are prepared to “accelerate our work on the defensive side.”
The clock is ticking for negotiations. Each side now faces greater and greater domestic pressure to reach an agreement that would calm US-China trade relations and prevent more damage from the ongoing and costly tariff battles.
