2024-08-01 07:25:17
The European Union (EU) is already preparing for the possible return of Donald Trump to the White House. Brussels is hoping to convince the former president, who promised in May to impose customs duties of 10% on goods imported to the United States, to find a deal. Failing this, the EU confirmed its intention to “protect its interests” by applying the principle of retaliation on products imported from the US. If the billionaire wins the November election and implements such a measure, Brussels could see a reduction of up to 150 billion euros per year.
During an interview with CNBC in June, the Republican candidate reiterated his desire to impose 10% customs duties on goods imported into the United States. He specified that such an increase would be accompanied by a tax cut in order to limit the consequences of his decision for American consumers.
“Ready to defend its interests”, the EU wants a deal first
He points to “two reasons” why he describes himself as “a great defender of cultural activities”. “First, for their economic activity, when other countries try to take advantage of it (…) but beyond the economic aspect, this will give you the power to negotiate with other countries “, he justifies. Those who will “benefit” from the United States are none other than China and, to a lesser extent, and “with a smile”, the European Union.
Trump’s first term between 2017 and 2021 is marked by many troubling events linked to these cultural activities. In 2018, his administration imposed 6.4 billion euros in duties on steel and aluminum imports from the EU. The 27 responded with a similar but very significant increase of 2.8 billion euros, mainly targeting products such as whiskey, bourbon, Harley-Davidson motorcycles and even yachts. The hatchet has been buried under the Biden administration.
To avoid its gravity, Brussels is leading and hoping for a possible victory for Donald Trump, who will first beat Kamala Harris, the Democratic candidate after Joe Biden withdrew his candidacy for the second term. According to The Financial Times, the EU plans, in the event of the victory of the businessman, to approach him before taking office to negotiate an agreement and list the American products that the company can buy in large quantities. “We need to show that we are a partner of the United States, not a problem,” said a European official.
But if the former president, who has not yet returned to Washington, continues to fulfill his election promise, Brussels will retaliate. “We will seek compromises, but we are ready to defend ourselves if necessary. We will not let fear guide us,” added the same leader.
Customs duties of 50% or more on US products?
Customs duties of 10% will affect the competitiveness of European products on the American market. EU exports could fall by 150 billion euros per year and prices increase by almost 2%. If the European Commissioner for Trade, Valdis Dombrovskis, hopes to avoid the “confrontation of the past” and that “America and the EU are strategic friends”, “especially in the current geopolitical situation”, Brussels expressed its intention to protect its interests . . “We protect our interests with customs duties and we are ready to protect them again if necessary,” the same anonymous official continued to the Financial Times.
If negotiations fail, the European Commission intends to establish a list of products which may be taxed at 50% or more. In addition, its officials mean that Washington has more interest in maintaining customs duties at their current level, due to the European products and services of the United States (pharmaceutical products, cars and food products). It will be of high quality compared to foreign products, mainly composed of raw material.
“Whatever happens this time, we are better prepared,” they told the Financial Times. On the American side, the increase in cultural activities can also be justified by the public deficit which grows more each year. From 2016, the year of Donald Trump’s election, until 2023, the final year of Joe Biden’s mandate, this deficit increased from 114 billion euros to 156 billion euros.
Moreover, although the EU has a significant trade surplus with the United States, its economy is growing at a much slower rate than that of its partner. This could lead to a decrease in demand and therefore a decrease in American exports to the Old Industry.
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