EU preps tariff hit list targeting US services

The EU is compiling a list of possible tariffs it could respond with should its negotiations with Washington fall through.

According to sources, the European Commission is considering export control measures on goods worth $845 billion, equating to roughly 74 billion euros. Still, it has yet to share the list with EU member states.

So far, its tariff package is set to include levies on several goods, including cars and bourbon from the US.

Trump threatened to impose a 30% levy on the EU

Since April, the US and EU have been engaged in trade discussions. Trump first unveiled a 20% tariff on European goods in April. He later suspended the move, cutting the rate to 10%. However, on Sunday, he declared a new 30% tariff set on the bloc to begin August 1, saying he wanted to rebalance the $235.6bn trade deficit between the EU and the US. 

The new levy announcement, however, resulted in French and German bonds slumping to levels last seen during the eurozone’s 2009–11 debt crisis. It also caused investors to raise concerns about the future of the $1.7 trillion transatlantic trade partnership. On Monday, the Trade EU commissioner, Maros Sefcovic, even  argued that new rates would be “almost impossible to continue the trading as we are used to in a transatlantic relationship.”

Before the EU negotiated for tariffs to remain at 10% and for several tariff exemptions and reductions for major exports like automobiles, the newly proposed levies have only added more complexity to the talks.

So far, the American President has threatened at least 20 other trading allies with more levies, including Canada, Japan, South Korea, Indonesia, and Brazil. He also warned he would set a 50% tariff on all copper imports.

Sefcovic maintains they need to protect the EU economy 

Trump had placed a 25% levy on European steel, aluminum, and cars to reduce the nation’s reliance on metal imports and encourage domestic production. Back then, Brussels slapped retaliatory tariffs on the country of $23.8 billion worth of US goods, calling the American measures “unjustified and harmful.” However, during negotiations, the EU later put off their tariffs as a show of good faith.

In April, the European Commission President, Ursula Von der Leyen, had proposed a tariff-free deal for industrial goods like cars. Still, Trump dismissed the idea as inadequate in addressing the trade deficit. 

To the most recent round of tariffs, Von der Leyen only urged EU members to keep negotiating with Washington. Sefcovic, however, claimed they are preparing for retaliatory tariffs in case negotiations fail before the August 1 deadline. He claimed they needed to shield the EU economy and focus on rebalancing. Nevertheless, he insisted he would do what he could to avoid a “super-negative scenario.”

Brussels plans to target about 11 billion euros if negotiations break down, or roughly $13 billion worth of US aircraft and parts. Their tariffs will also extend to cars, machinery, electrical products, chemicals, fruits and vegetables, and alcoholic drinks like bourbon and rum. One person familiar with the matter claimed the commission may impose retaliatory measures on US tech companies’ products. However, the Commission’s trade policy committee still has to greenlight the tariff list before it can be implemented. 

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