Failure of tariff talks with the US could lead to EU imposing retaliatory measures on American-made cars and aircraft
Moving Forward with Countermeasures: EU's Reaction to US Tariffs
The European Commission has decided to simultaneously file a complaint with the World Trade Organization (WTO) while taking a tough stance against Trump's imposition of hefty tariffs against the EU. In response to the US leader's announcement of a 20% "reciprocal" tariff on most EU goods back in April, the EU is ready to retaliate if needed.
Trump, however, maintained a "baseline" 10% tariff on imports, including goods from the 27-nation European Union. Despite this, the EU remains hopeful and determined to reach a negotiated solution with the US, working towards a win-win scenario for both parties.
EU chief Ursula von der Leyen reiterated the bloc's stance, expressing confidence in finding an agreement that benefits consumers and businesses on both sides of the Atlantic. The EU has been cooking up a list of products to target in case talks fail, with an estimated value of 21 billion euros.
A Broad Range of Products in the Crosshairs
The EU's list includes US-made aircraft, cars, human hair, nuts, fruit, plastics, chemicals, electrical equipment, and even bourbon whiskey. Planes and autos account for a significant portion of the value, with aircraft worth 10.5 billion euros and automobiles exceeding 12 billion euros. Chemicals and plastics worth 12.9 billion euros are also on the list.
The EU has demonstrated its willingness to take further action, should Trump refuse to back down. This could potentially involve targeting US tech giants. Between April and now, EU officials have visited Washington for talks, but so far, progress has been minimal.
Calling out the WTO
The EU has stated that it believes Trump's tariffs violate fundamental WTO rules. The EU trade chief, Maros Sefcovic, revealed that 70% of the bloc's total exports face levies at rates between 10 and 25%. With US trade probes underway into various sectors, the potential impact on EU exports is immense, affecting around 97% of the total exports to the US.
[1] The European Union's countermeasures are a response to the tariffs imposed by the Trump administration on EU goods, including cars. The specific goods targeted by the EU for retaliation include aircraft, passenger cars, medical devices, chemicals, plastics, agricultural products, and even bourbon and spirits.
[2] The value of EU imports targeted by the retaliatory tariffs amounts to nearly €100 billion, according to estimates. The list includes over 4,800 goods. Initially, bourbon and spirits were excluded due to pressure from wine-producing countries, but they have since been reintroduced to the list.
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[3] The United States financial sector, including banking-and-insurance and fintech, could potentially be affected by the escalating tariff war, as it heavily relies on cross-border investments.
[4] The automotive industry in the EU is concerned about the impact of these tariffs on car-maintenance businesses, as higher prices for imported cars could lead to reduced sales and ultimately job losses.
[5] The retail sector could also suffer, particularly with higher costs for importing items such as electronic equipment, appliances, clothing, and footwear, which are commonly found in retail stores.
[6] The energy and aerospace industries are vulnerable to these tariffs, with increases in costs for materials and components, affecting the pricing competitiveness of European companies in these industries.
[7] The manufacturing industry in general could face significant challenges, given the potential increases in costs for imports of raw materials, components, and machinery, which are essential for production processes.
[8] The transportation industry, including shipping and logistics, may experience increased expenses, as tariffs could lead to higher costs for freight and transportation of goods, potentially impacting the prices consumers pay for goods in the lifestyle sector.
[9] The call for action is not limited to the EU, as other countries have warned about the negative consequences of the swingeing tariffs on global trade, particularly for the affected industries like electric-vehicles, where competition and investment are crucial.
[10] The policy-and-legislation landscape, as well as the political climate, will play a significant role in determining the outcomes of these trade disputes.
[11] The potential for war-and-conflicts may increase due to rising protectionist measures, as countries feel compelled to act in response to perceived economic threats.
[12] In light of these challenges, investing in businesses these days requires careful analysis of the tariff and trade policies in place, as they could significantly impact the growth and sustainability of those businesses.
[13] As the EU and US continue their negotiations, the outcome will have far-reaching consequences for various sectors, from cars and car-maintenance to banking-and-insurance, energy, aerospace, retail, transportation, and lifestyle. The decisions made will shape the economic landscape for both parties, potentially affecting millions of people and businesses worldwide.
