The 90-day truce in the intensifying trade war between the US and EU is now at the halfway mark. Throughout this period, the impact of large tariffs and counter-tariffs continues to shape negotiations. Announced by U.S. President Donald Trump 45 days ago, the truce has yet to yield a resolution, as both sides navigate the complexities of their trade relationship.
In keeping with this retaliatory undercurrent, the U.S. government has imposed a succession of tariffs on goods imported from the EU as well. A 25 percent tariff is currently in place on automobiles, aluminium and steel imported from Europe. Beyond that, there’s a wider 10% tariff on all imported passenger vehicles from the EU. These kinds of measures have sparked alarm bells with EU officials and European industry, leading to discussions about potential retaliatory actions.
In retaliation to these tariffs, the European Commission has created a “watch list”. Non-agriculture It covers U.S. products worth €21 billion that would be hit by EU tariffs if the talks collapse. Yet this opening roster ran into trouble after Trump’s surprise announcement of the truce, a reminder of just how precarious any thaw in relations might prove to be.
The U.S. administration has made its intentions known, first in letters. In answer to that, the European Commission has participated in sustained conversations, illustrating that back-and-forth between the two sides isn’t over yet. Despite this exchange, Trump has issued stern warnings about future tariffs, threatening to impose “a straight 50% tariffs on the European Union” effective June 1, 2025, should negotiations falter.
To fight back against U.S. tariffs, the Commission has already proposed a €95 billion package of countermeasures. This strategy is intended to “rebalance” U.S. trade relations if negotiations on a positive path don’t progress. The Commission is hopeful about collaborating with the U.S. on shared concerns regarding China, particularly issues such as overcapacities that impact both economies.
Trump has voiced strong criticism of the EU’s trade practices, stating, “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with.” In this letter, he outlined his positions on trade barriers and punishments. He insists that all these things lead to a very large trade deficit with the U.S., which he calls “totally unacceptable.”
As negotiations continue, the deadline for a final agreement is approaching quickly. Each side is poised to either further inflame animosity or make a move toward peace. The result of these discussions promises to have profound effects on the future of transatlantic trade relations.
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