EU Officials Concerned US Tariff Expansion May Breach Spirit Of Summer Trade Deal: Report

• As per a White House statement from late July, the European Union will pay the United States a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors. 
• The sectoral tariffs on steel, aluminum, and copper remained unchanged, with the EU continuing to pay 50%; the parties will discuss securing supply chains for these products. 
• According to the report, the EU believes the spirit of the agreement means that the 15% rate should cover industries beyond cars, pharmaceuticals, chips, and wood that are explicitly referenced in the deal.

European Union officials are reportedly concerned that a U.S. effort to include even more EU products facing elevated steel and aluminum tariffs could conflict with the intent of the trade agreement signed by the two sides earlier this summer.

According to a Bloomberg News report, citing people familiar with the matter, Maros Sefcovic, the EU’s trade chief, and trade ministers from the bloc’s 27 member states, will raise the issue with U.S. Commerce Secretary Howard Lutnick when they meet in Brussels on November 24.

The report added that EU ambassadors prepared for the intervention last week.

EU And US Trade Deal

In August, U.S. President Donald Trump and the European Union reached a trade agreement aimed at eliminating numerous EU tariffs on American exports. ​The White House had then noted that the United States committed to apply the higher of either the U.S. Most Favored Nation tariff rate or a tariff rate of 15%, on originating goods of the European Union.

As per a White House statement from late July, the European Union will pay the United States a tariff rate of 15%, including on autos and auto parts, pharmaceuticals, and semiconductors. However, the sectoral tariffs on steel, aluminum, and copper remained unchanged, with the EU continuing to pay 50%. The parties will discuss securing supply chains for these products. 

In early October, Bloomberg News reported that the EU, as part of the next phase of its deal with the U.S., was working on a new proposal to sideline President Trump’s demands to unwind regulations. The Trump administration had sought a revision of laws around technology, digital, and corporate environment sectors in the EU.

EU Concerns

Bloomberg News noted that the EU is concerned that the list of goods hit by the 50% metals rate, currently surpassing 400 items, as well as potential new, higher levies on different industries, would result in the dilution of the EU-US trade deal and the agreed 15% tariff cap.

According to the report, the EU believes the spirit of the agreement means that the 15% rate should cover industries beyond those explicitly mentioned in the deal, such as cars, pharmaceuticals, chips, and wood.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was flat in Monday morning trade, and the Invesco QQQ Trust ETF (QQQ) rose 0.10%.

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