EU paves way to finalise US trade deal and avoid Trump tariff hike
By Philip Blenkinsop
EU and US Move Closer to Trade Agreement Amid Tariff Threats
BRUSSELS, May 20 (Reuters) - The European Union struck a provisional agreement on Wednesday on legislation to remove import duties on U.S. goods, a key part of a trade deal reached with Washington in July that could stave off higher U.S. tariffs on EU products.
But the United States said it was still reviewing certain amendments included in the legislation and stressed Brussels also needed to address non-tariff barriers identified in the deal struck at U.S. President Donald Trump's golf resort in Scotland last July.
Key Elements of the Trade Deal
Under that deal, the EU agreed to remove import duties on U.S. industrial goods and grant preferential access to U.S. farm and seafood products, while accepting U.S. tariffs of 15% on most EU goods.
Nearly 10 months after that framework accord, the European Parliament and the Council, the body representing EU governments, agreed on a legislative text to allow the EU duty reductions to come into force.
Provisions and Safeguards
After five hours of negotiations, they also agreed on reinforced provisions to suspend the concessions in case Trump reneges on the agreement and a sunset clause to terminate the deal at the end of 2029 unless there is new legislation to renew it.
US Reaction and Ongoing Review
Statements from US Officials
U.S. 'ENCOURAGED,' REVIEWING DETAILS
U.S. ambassador to the EU Andrew Puzder congratulated the bloc on the deal.
"We are encouraged by the progress this step represents (while we will review the details closely)," he said in a post on X.
The U.S. Trade Representative's office said the review would examine whether amendments included in the EU legislation were compliant with the trade deal. "To be clear, tariff cuts are only one aspect of the Agreement—the EU must also address the non-tariff barriers and regulatory matters identified in the Joint Statement, which have unfairly limited U.S. market access to the EU for years," it said in a post on X.
Impact on EU-US Trade Relations
The internal EU deal should bring some calm to the world's largest trading relationship, with an annual exchange of $2 trillion in goods and services, coming a week after Trump's visit to China that featured warm words but no breakthroughs. The EU has relied on the U.S. to take in some 20% of its goods exports, but Trump is determined through tariffs to reduce the goods trade deficit with the bloc of more than $200 billion.
Reactions from EU Officials and Industry
"I am proud to announce that Europe has avoided a damaging escalation of transatlantic trade tensions and protected European companies, investments and millions of jobs on both sides of the Atlantic," Zeljana Zovko, the lead trade negotiator in the European People's Party on the U.S. deal, said on X.
"The EU walks the talk, while defending our interests. Once approved, it'll boost transatlantic stability and cooperation," European Trade Commissioner Maros Sefcovic wrote on X.
The American Chamber of Commerce in the EU said it was relieved to see the agreement, saying it was a critical step for businesses that rely on stable transatlantic trading and investment relations. SpiritsEurope was also positive, saying it would ensure greater stability and predictability. German Economy Minister Katherina Reiche said it provided planning certainty for businesses.
Trump's Tariff Deadline and Legislative Response
July 4 Deadline and Tariff Threats
TRUMP SET JULY 4 DEADLINE
Trump has said he would impose much higher tariffs on EU goods, including cars, if the EU did not implement its trade deal commitments by July 4, having earlier threatened to raise tariffs on EU car imports to 25% from the current 15%.
EU lawmakers had twice paused the required legislation after Trump's threats to impose new tariffs on European allies who did not back his proposed acquisition of Greenland and after the U.S. Supreme Court struck down his global tariffs.
Next Steps for EU Approval
The bloc should now meet Trump's July 4 deadline, with a final vote of approval in the European Parliament expected in mid-June. Bernd Lange, the chair of parliament's trade committee, expressed confidence that lawmakers would vote in favour, saying the agreement ensured a safety net for dealing with an unpredictable U.S. administration.
Outstanding Issues and Safeguards
EU lawmakers had wanted tougher guarantees, but the two sides did not accept their proposed "sunrise clause" under which the EU would only cut duties when the U.S. fulfilled its side of the deal and the "sunset clause" was pushed from the end of March 2028 to the end of 2029.
The European Commission can also suspend tariff preferences by the end of this year if the U.S. keeps in place tariffs higher than 15% on steel and aluminium "derivative" products like wind turbines and refrigerators.
EU governments had had less appetite for inserting such items, concerned they could antagonise the Trump administration and create uncertainty for EU businesses.
Reporting Credits
(Reporting by Philip Blenkinsop in Brussels; additional reporting by Andrea Shalal in Washington, Chandni Shah in Bengaluru, Mrinmay Dey and Chris Thomas in Mexico City. Editing by Alex Richardson, Lincoln Feast, Mark Potter, Rod Nickel)
