EU and U.S. Reach Understanding on Tariffs,Avoiding Escalation
The European Union and the United States have reached an understanding regarding tariffs,averting a notable trade dispute that threatened to impose substantial levies on a large portion of EU produce. The agreement, which is not legally binding, aims to establish a tariff ceiling of 15% on goods traded between the two economic blocs.
As of Thursday, officials from both sides were finalizing a joint statement to outline the terms of their accord. A spokesperson for the European Commission, Olof Gill, confirmed that the EU’s clear understanding is that the U.S.will implement the agreed-upon 15% tariff ceiling across the board.The Commission,which negotiates trade agreements on behalf of the EU’s 27 member states,emphasized that the U.S. has made these commitments and that the responsibility for their implementation now rests with the U.S.
While the agreement sets a general tariff ceiling,specific “strategic” goods have been carved out. These exemptions include aircraft and aircraft parts, certain chemicals, some generic drugs, and natural resources. However, European wine and spirits will initially be subject to the 15% levy, with the possibility of future exemptions as negotiations on additional carve-outs continue.
The U.S.Distilled Spirits Council expressed disappointment that an agreement on spirits was not reached, highlighting the U.S. as the EU’s largest market for alcohol exports. The council’s chief executive stressed the importance of securing a permanent return to zero-for-zero tariffs on spirits to provide certainty for the 1.7 million workers in the U.S.spirits industry.
This understanding comes after President Trump had previously threatened the EU with 30% tariffs, a move that the European Commission President had warned would effectively end trade between the two entities. In anticipation of a potential breakdown in talks,the Commission had prepared retaliatory measures valued at tens of billions of euros,scheduled to take effect on august 7. However, these countermeasures are expected to be frozen if the current agreement holds. The EU has indicated that if a deal is reached, the retaliatory tariffs will not be necessary.