TMTPOST -- The European Union on Monday suggested it decided to suspend its planned countermeasures against the United States as it is continuing negotiations to finalize the trade agreement announced a week ago.
Credit：European Commission
EU spokesperson Olof Gill said the bloc would pause the retaliatory tariffs that are set to come into effect on Wednesday as it is working with the U.S. on the trade agreement.
「The EU continues to work with the U.S. to finalize a joint statement, as agreed on 27 July,」 said Gill, adding: 「With these objectives in mind, the [European] Commission will take the necessary steps to suspend by six months the EU』s countermeasures against the US, which were due to enter into force on 7 August.」
The EU spokesperson in a statement released on Monday touted a deal on tariffs and trade agreed by European Commission President Ursula von der Leyen and US President Donald Trump on July 27 as restoring 「stability and predictability for citizens and businesses on both sides of the Atlantic.」
Following his in-person meeting with ven der Leyen on July 27, Trump that day said the U.S. would set a baseline tariff of 15% for most European goods, including automobiles, and the EU had agreed as part of the deal to buy $750 billion of energy products from the U.S. and invest an additional $600 billion in his country. Trump claimed a 「straight-across tariff of 15%」 for 「automobiles and everything else,」 adding that U.S. exports to Europe would face a 0% rate.
Von der Leyen the same day said the 15% tariff level 「is the best we could get」, and the level would cover cars, which were subject to duties of 27.5%, semiconductors and pharmaceuticals, which the Trump administration has not impose any new tariffs yet but signaled extra duties would come on the horizon. Both sides had not taken any decision on tariffs regarding wine and spirits, she added.
EU officials said the two sides agreed on a quota, above which the 50% tariffs on steel and aluminum imports would apply, but U.S. officials said nothing had been agreed upon. The U.S. under the deal will grant exemptions for about €70 billion of trade, according to Brussels. Von der Leyen announced that zero-for-zero tariffs will apply to "all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources, and critical raw materials."
As a the centerpiece of the U.S.-EU agreement, a fact sheet unveiled by the White House on July 28 confirmed the EU』s committed energy purchases worth of hundreds of billions of dollar. 「The EU will double down on America as the Energy Superpower by purchasing $750 billion of U.S. energy exports through 2028,」 the White House said in the release, suggesting the purchases will not just strengthen the U.S. energy dominance, but reduce European reliance on 「adversarial sources」 like Russia.
The fact sheet said the EU will eliminate all of tariffs on U.S. industrial goods exported to the bloc, and pay a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors. 「However, the sectoral tariffs on steel, aluminum, and copper will remain unchanged—the EU will continue to pay 50% and the parties will discuss securing supply chains for these products,」 it added. Key to getting the 15% tariff rate for pharmaceuticals and semiconductors was the EU』s pledge to make U.S. investment, Bloomberg that day cited people familiar with the matter.
Prior to the agreement, the EU on July 23 threatened to impose 30% retaliatory tariffs on nearly €100 billion ($117 billion) worth of goods in case no deal by the August 1 deadline, and Trump moves forward with his threat of 30% tariffs. As a part of a first wave of countermeasures, the EU would combine an already approved list of tariffs on €21 billion of U.S. goods and a previously proposed list on an additional €72 billion of American products into one package, a European Commission spokesman said.
The EU has finalized a second list of countermeasures to target American goods worth €72 billion, or $84 billion, including Boeing Co. aircraft, automobiles, bourbon, machinery products, chemicals and plastics, medical devices, electrical equipment, wines and other agricultural goods if it decides to retaliate against new U.S. tariffs, Bloomberg last month cited a 206-page list prepared by the European Commission. The news media outlet on July 23 cited sources that industrial goods such as Boeing Co. aircraft, U.S.-made cars and bourbon whiskey, would face a levy that matches Trump』s 30% threat as part of the EU』s countermeasures.
U.S. Commerce Secretary Howard Lutnick last week highlighted that digital service tax and metal trade will be key topics in upcoming trade negotiations with the EU. He said the key to why the EU did the deal is autos and pharmaceuticals. It is important for the EU to make the baseline 15% tariff under the deal covers pharmaceuticals because the U.S. is going to introduce higher pharma tariffs in the next two week.
