European Union Plans to Lower Import Tariffs on U.S. Goods to Avoid Trump’s Tariff Measures

Source: Global Market Report

EU negotiators are expected to reach an agreement on Tuesday to lift certain import tariffs on US goods, fulfilling a trade deal reached with the United States last year, in order to avoid the threat of high tariffs imposed by President Trump.

According to the terms of the agreement reached at Trump’s Turnberry golf resort in Scotland last July, the EU agreed to remove import tariffs on US industrial goods and grant preferential access to US agricultural products and seafood. In exchange, the US will impose a 15% tax on the vast majority of EU goods.

However, almost 10 months later, the European Parliament and the Council of the European Union, which represents the governments of EU member states, still need to finalize the legislative text before the EU’s tariff reduction policy can formally take effect. The main differences currently focus on the inclusion of safeguard clauses to prevent Trump from tearing up the agreement.

Negotiators from the European Parliament and the Council of the European Union will hold a final round of talks at 9 p.m. MEPs involved in the negotiations are optimistic that a final agreement will be reached on Tuesday night or in the early hours of Wednesday.

Trump has explicitly warned that if the EU fails to meet its trade agreement commitments by July 4, higher tariffs will be imposed on EU goods, including cars. He has previously threatened to raise tariffs on EU car imports from the current 15% to 25%.

Previously, Trump threatened to impose new tariffs on the EU if European allies did not support his plan to acquire Greenland. Coupled with the US Supreme Court's prior decision that his global tariff policy was unconstitutional, these two events have led the European Parliament to postpone the relevant legislative process twice.

If negotiations go smoothly and a consensus is reached, the EU will complete the process before Trump’s July 4 deadline. The European Parliament is expected to hold a final vote for approval in mid-June.

MEPs advocate for stricter safeguard mechanisms, mainly including three points: first, an entry-into-force clause stipulating that the EU will only implement tariff reductions if the US side fulfills its commitments; second, if the US violates the agreement, the EU has the right to suspend the implementation of the deal; and third, a termination clause specifying that the EU’s preferential tariff policy will automatically expire on March 31, 2028.

However, EU governments have taken a cautious attitude toward these additional clauses, concerned that this could provoke the Trump administration and create policy uncertainty for EU businesses.