Talks between the U.S. and the European Union (E.U.) began this week, amid threats from U.S. President Donald Trump to impose “reciprocal tariffs” on European nations, as well as other nations around the world.
According to the E.U.’s top trade negotiator, a deal to avoid tariffs is quite possible, and he is encouraged by the ongoing talks. The E.U. believes that the U.S. also wants to avoid any self-inflicted harm on trade and the economy as a result of unnecessary tariffs.
E.U. Trade Chief “Hopeful” on the Potential to Avoid an All-Out Trade War
Maros Sefcovic, European Commissioner for Trade and Economic Security, visited Washington, D.C. this week for meetings with U.S. officials meant to dislodge the tariff threat. Yesterday, Sefcovic held a four-hour meeting and felt hopeful, in remarks he made following the meeting’s conclusion. In his remarks, Sefcovic said “Our number one priority is avoid this period of pain, you know? Because usually what happens, we have measures, we have counter measures and then usually, very often, the same people have to sit at the same table and resolve the problem.”
As part of the extensive talks, U.S. Commerce Secretary Howard Lutnick, Director of the National Economic Council Kevin Hassett, and U.S. Trade Representative Jamieson Greer all participated alongside E.U. representatives.
The E.U. is highly dependent on the U.S. for many imports and exports.
President Trump last week threatened blanket reciprocal tariffs on all types of goods traded between the U.S. and the world. Given the E.U.’s dependence on U.S. markets for a variety of imports and exports including automobiles, trucks, grain, liquified natural gas (LNG), and more, any reciprocal tariffs could have costly consequences on the global economy.
As part of trade talks, both parties discussed a key starting point: ultimately removing tariffs on automobile imports. The E.U. claimed “positive momentum” on this and other fronts today. E.U. trade chief Sefcovic said “The priority, which was highlighted several times in our conversation, was to work on cars — how to lower the tariffs, eventually even eliminate them.”
As usual with Trump-era tariffs, uncertainty is the big issue.
Ultimately, the decision on whether or not to evolve the tariff strategy will come down to Trump himself. A few weeks ago, Trump backtracked on tariffs against Canada and Mexico, while choosing to leave in place tariffs against China. While those countries are key trade partners, the 28-member European Union represents a crucial piece of the global geopolitical landscape, and the E.U.’s economy has ripple effects on the world, so any decisions on this front will be closely watched.
