BRUSSELS – The European Union braced on Friday for a possible letter from US President Donald Trump outlining planned duties on the United States’ largest trade and investment partner after a broadening of his tariff war in recent days.
The EU initially hoped to strike a comprehensive trade agreement, including zero-for-zero tariffs on industrial goods, but months of difficult talks have led to the realisation it will probably have to settle for an interim agreement and hope something better can still be negotiated.
The 27-country bloc is under conflicting pressures as powerhouse Germany urged a quick deal to safeguard its industry, while other EU members, such as France, have said EU negotiators should not cave into a one-sided deal on US terms.
After keeping much of the world guessing, Trump has outlined new tariffs for US imports of goods from a number of countries, including allies Japan and South Korea, along with a 50 per cent tariff on US imports of copper, and a hike to 35 per cent on Canadian goods.
His cascade of tariff orders since returning to the White House has begun generating tens of billions of dollars a month in new revenue for the US government. US customs duties revenue shot past $100 billion in the federal fiscal year through to June, according to US Treasury data on Friday – exceeding the largest annual take ever from customs duties.
US consumers face an effective US tariff rate of more than 20 per cent, the highest since the early 1900s, the International Chamber of Commerce estimated this week after Trump’s latest announcements. Rates are already around 16 per cent, their highest since the 1930s. Economists expect much of that to be passed along as higher consumer prices for imported goods, although there is only limited evidence of that occurring so far.
“So at some point, the new tariffs will start to bite, or if companies decide they can’t trade under those conditions, shelves will start to look decidedly sparse,” ICC Deputy Secretary General Andrew Wilson said.
A person with knowledge of the US-EU negotiations said an agreement was close, but that it was hard to predict if the EU might still get a letter announcing more tariffs or when any agreement might be finalised. (Reuters)
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