Europe is standing up to Trump tariffs – it could impact the UK ...Middle East

The EU has said it won’t respond to “threats” from the White House, as it attempts to establish a new trade deal with the US based on “respect”.

US President Donald Trump threatened to impose a 50 per cent tariff on all goods sent to the US from the EU on Friday, raising fears of a renewed trade war.

Trump has also expressed frustration at delays in agreeing a deal with the EU, saying on social media that “our discussions… are going nowhere.”

Following a call with US trade officials, the EU’s Trade Commissioner Maros Sefcovic said that the 27-country bloc was “fully engaged, committed to securing a deal that works for both.”

But Sefcovic said that trade between the EU and US “must be guided by mutual respect, not threats” and warned “we stand ready to defend our interests.”

Maxwell Marlow, director of public affairs at free trade thinktank the Adam Smith Institute, said that Sefcovic’s statement was a warning shot that the EU would not be bullied into an unfavourable trade deal.

Marlow said the EU was playing harder ball than the UK in negotiations over a trade deal with Trump and that an agreement would be “much more complicated and painful for both parties”.

“Their approach is less constructive to, let’s say the Brits, because their market is larger, they’ve got more members, they’ve got more to offer,” he told The i Paper.

There are a “number of stumbling blocks” in negotiations, Marlow said, predicting it could take years before a deal was reached.

Maroš Šefčovič warned the EU is ready to “defend its interests” in trade with Trump. (Photo: Geert Vanden Wijngaert/AP)

“The EU wants to maintain their independent approach, they want to maintain connections with China. That’s really important for them, and something the Trump team don’t want.

“There will be disagreements over whether the US should actually be permitted to have access to the Customs Union, whether that is pharmaceuticals, big tech, and also stuff like automobiles and raw goods from the US.

“And the EU will want to maintain their regular their positions of regulatory superpower, which again, is difficult for Trump. There’s a difference between the the ideology of regulation in EU and US. That’s going to be the biggest stumbling block for both of these parties.”

Mr Maxwell said that Trump’s abrupt threat of 50 per cent tariffs “will upset negotiations.”

Shanker Singham – CEO of consultancy firm Competere, former trade adviser to the UK’s Trade Secretary and former adviser to the US Trade Representative – said the two parties were worlds apart in negotiations – and that the US felt the EU was “not negotiating in good faith”.

“The EU has a history of anti-competitive regulations, agricultural protectionism and barriers in standards and other technical barriers to US exports going back forty years. It is not surprising that if they are unwilling to change any of those – and it certainly seems so from their offers – then a deal cannot be done, and Trump will escalate the tariff,” he said.

“The US administration feels that the EU is not negotiating in good faith since it does not suggest it is willing to change the major problems the US has. The EU will only enter the deal zone if they make a good faith effort to change some of the issues raised in their national trade estimate entry and they are very far from that.”

UK could suffer in EU-US trade deal

Mr Maxwell said there could be “knock-on effects” from the tensions on to the UK.

“Our two primary trade relationships are with the EU and US, so pass-through costs may go up for Brits importing from the EU or US in areas affected by tariffs,” he said.

“However, if the UK can substitute goods bought by the US from the EU (and visa versa), we could profit as we could sell at a lower relative price, such as with, say, exporting complex steel manufactures.”

Singham also warned that the UK could get caught in the crossfires of a US-EU trade war through its proximity to EU regulations.

“While the UK is now outside the immediate line of fire, the closer the UK aligns to the very EU regulations the US most objects to, the worse the UK’s situation will become, making any further tariff reductions unlikely,” he said.

Renewal of the trade war which commenced – and then climbed down – earlier this year could destabilise the global economy, impacting UK businesses and shareholders.

In April, Trump launched a trade war which rattled global markets and knocked trillions off the stock exchange. This included imposing 20 per cent tariffs on the EU.

Billions were wiped off the value of UK pension pots, with fears that the turbulence could hinder the UK’s economic growth and push up inflation.

After turmoil failed to subside, the US president announced a three month pause on the tariffs until early July to allow for further negotiations

However, he kept a 10 per cent baseline tax in place against all trading partners and a 25 per cent tariff against EU steel and aluminium imports.

In response to the initial tariffs, the EU said it would introduce a 25 per cent tariff on €18bn (£15bn) worth of US goods entering Europe, but paused the measure when Trump climbed down.

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European leaders have sought to avoid a trade war with the US, with Ireland’s Taoiseach (Prime Minister) Micheál Martin saying “we do not need to go down this road” and that “negotiations are the best and only sustainable way forward”.

German Economy Minister Katherina Reiche said the bloc “must do everything” to reach a solution with the US.

But they have refused to bow to pressure from the White House.

France’s Foreign Minister Laurent Saint-Martin, said that the EU was focusing on “de-escalation”, but was “ready to respond” if it took further economic hits.

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