European Union Prepares to Counter U.S. Tariffs with New Measures
BRUSSELS - The European Commission is set to propose counter-tariffs on U.S. goods valued at approximately EUR93 billion ($109 billion), as tensions escalate over impending tariffs announced by the United States. The Commission's action comes ahead of discussions between European Trade Commissioner Maros Sefcovic and U.S. Commerce Secretary Howard Lutnick, aimed at reaching a negotiated resolution before the U.S. implements a 30% tariff on imports from the EU, scheduled for August 1.
The Commission's strategy includes consolidating two previously considered tariff lists, which total EUR93 billion, into a single recommendation for approval by EU member states. This preparation reflects a proactive stance, although no countermeasures will take effect until August 7. Previously, the EU had agreed to suspend its initial countermeasures earlier this year.
Support for these countermeasures has been expressed by Germany, indicating a unified front among EU nations. Following a recent trade agreement between the U.S. and Japan, European markets experienced a slight uptick, particularly in the automotive sector. The deal with Japan has fostered renewed optimism regarding the potential for a similar resolution with the EU, particularly as it introduces a baseline tariff of 15% that may apply equally to vehicles.
In 2024, the U.S. imported over $55 billion in vehicles and automotive components from Japan, while imports from the EU reached about EUR47.3 billion ($55.45 billion). Analysts suggest that unless an agreement is reached with the U.S., European automakers could find themselves at a competitive disadvantage relative to their Japanese counterparts.
Despite the positive developments in U.S.-Japan trade relations, EU officials are cautious, noting that the dynamics of EU-U.S. negotiations differ significantly from those between Japan and the U.S. The German government has indicated that any concessions made to Japan may set a precedent for the EU's negotiating goals.
Market analysts from UBS have advised caution when speculating about a potential EU-U.S. trade agreement, highlighting that the deal with Japan may not directly translate into favorable terms for European automakers. Volkswagen and BMW have refrained from commenting on the situation, reflecting a cautious approach among major industry players.
As discussions progress, EU diplomats are analyzing the U.S.-Japan agreement's specifics, including Japan's commitment to increase rice purchases from the U.S. while maintaining existing tariffs on agricultural products. This multifaceted negotiation landscape underscores the complexities involved in transatlantic trade relations.
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