1 week Ago By Jan Strupczewski
With higher US tariffs postponed by 90 days, European Union finance ministers will brainstorm how to use that time to get a trade deal with Washington and how to co-ordinate their efforts to handle higher tariffs if they do not. or signup to continue reading US President Donald Trump on Wednesday suspended for 90 days the reciprocal tariffs of 20 per cent he imposed on Europe on April 2, though a 10 per cent rate is in place as it is with most other countries globally. He also said he expected Europe to buy more US oil and gas as part of the rebalancing of the trade relationship.
"The fact that we will have 90 days respite is, quite frankly, very helpful, because this means that we can now strategise and we'll have 90 days to prepare ourselves in case there is no trade to deal with the Americans," said one senior EU official involved in preparing the ministerial talks. Negotiations with Washington on how to avoid higher tariffs altogether are handled by the European Commission, which is in charge of trade policy for the whole 27-nation EU. If there is a deal with the US on trade within the next three months, possibly along the lines of the EU's zero-tariff proposal on all industrial goods, the problem would be solved.
But a no-deal outcome is also possible, which would leave the response in the hands of the 27 EU governments that will have to help the industrial sectors hit hardest. The most affected industries are steel, aluminium, cars, timber and pharmaceuticals. US tariffs of 25 per cent are already in place on steel, aluminium and cars.
The European Central Bank and the European Commission estimate the impact of the US tariffs on the EU economy would be substantial and total 0.5 per cent to 1.0 per cent of GDP.
Given the EU economy as a whole is forecast to grow 0.9 per cent this year, according to the ECB, the US tariffs could put the EU in recession. Co-ordination of industry support will be key because some governments have stronger public finances and can afford to help their companies while others cannot.
Such inequality would distort fair competition in the single EU market. The EU's single market of 450 million consumers is one of the biggest assets the bloc has in any trade disputes, but to make it really effective, the EU must reduce the regulatory constraints that effectively act as tariffs. The International Monetary Fund estimates intra-EU trade barriers are equivalent to a 44 per cent tariff on goods and a 110 per cent tariff on services.
EU ministers are likely to focus on reducing these obstacles to EU trade as a key response to US tariffs. Advertisement Sign up for our newsletter to stay up to date. We care about the protection of your data.
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