EU Proposes Retaliatory Trade Measures, Seeks New Trade Partners, as Tariff Negotiations Continue

Massive global tariffs set to take effect in early July have been paused and their effective date extended to August 1 by the White House.  It was widely reported, in the run-up to the original effective date of July 9th, that the EU and US were in vigorous negotiations over tariff rates going both ways across the Atlantic.  The pause in the effective date seemed designed to allow for more time for such negotiations, but was followed quickly by an announcement that the US would levy a 30% blanket tariff on all EU and Mexican goods starting August 1.  This move seems to have taken EU officials off-guard.  Subsequent reporting from the AP confirms that the EU is pursuing multiple paths in response to US tariff threats, including readying its own retaliatory trade measures and also looking for ways to open new markets to EU goods.  

WHY IT MATTERS

The EU is the largest trade partner of the US and is the largest trade bloc in the world.  Its exports are tied to many economic sectors in the US, including electronics and pharmaceuticals, and it also exports steel and aluminum to the US.  EU officials have called the proposed new tariffs “unacceptable” and signaled their intentions to release their own measures if the US moves forward as announced.  Meanwhile, representatives of the US and the EU continue to negotiate ahead of the August 1st effective date for the new tariffs.  It remains to be seen whether the August 1st deadline is a firm date or a tactic designed to spur greater concessions in the ongoing negotiations.