The European Union (EU) is preparing to announce a further range of US goods it could hit with retaliatory trade tariffs, as efforts to negotiate with US president Donald Trump’s administration fail to make headway.
EU negotiators are becoming increasingly frustrated with the lack of inroads being made in their efforts to strike a deal with the US, that would suspend import tariffs Mr Trump has slapped on transatlantic trade.
While market turmoil forced Mr Trump to scale back higher tariff rates he placed on most trading partners, a 10 per cent import tax on most goods sold into the US remains. Steeper 25 per cent tariffs on imports of steel and cars also remain in place.
A 90-day pause Mr Trump announced on the higher 20 per cent blanket tariffs put on nearly all EU products is due to run out in mid-July.
The European Commission, the EU’s executive arm that sets trade policy, is now planning to increase the pressure on the US to cut a deal.
An initial package of counter-tariffs on €21 billion of US goods, such as soybeans, oranges, clothes and steel, has been temporarily suspended, to give negotiations a chance during Mr Trump’s three-month pause.
The commission is later this week expected to begin consultation on a second, wider package of counter-tariffs, that would kick into effect if talks fail.
The retaliatory measures will target the import of US goods, rather than hitting the operation of US tech multinationals, according to one EU official with knowledge of the plans.
The Government has been lobbying the commission to refrain from drawing US tech and social media giants into the trade dispute, something France has suggested as a way to turn the screw on the US.
A provisional list of US products in the firing line for tariffs is expected to be published by the commission this week. National governments and industry will then make submissions for possible changes.
France, Italy and Ireland successfully lobbied to have US whiskey, bourbon and dairy removed from the EU’s first package of import levies, due to fears exports of European spirits and dairy would be singled out for higher tariffs by Mr Trump in response.
The commission is also preparing to take a case to the World Trade Organisation (WTO) against Mr Trump’s “unjustified” tariffs.
Speaking on Tuesday, European trade commissioner Maroš Šefčovič said EU officials were considering “litigation to preserve and reinforce a multilateral, rules-based trading system”.
One source said this would involve lodging a “symbolic” case at the WTO, the international organisation that regulates international trade.
During Mr Trump’s first term the EU turned to the WTO to challenge US tariffs put on imports of European steel and aluminium, which were eventually suspended during Joe Biden’s presidency.
Mr Šefčovič, who is leading EU efforts to negotiate with the US, said up to this point the 27-state bloc had shown “significant goodwill” in the ongoing tariff dispute.
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The trade commissioner said further US tariffs targeting imports of pharmaceutical products, computer chips, lumber, and critical minerals “could well be on their way”.
If Mr Trump did push ahead with plans for these extra import levies, nearly all trade from the EU to the US would be impacted by tariffs, he said.
EU officials have projected that would in theory cost European businesses €100 billion in import taxes. Though in practice the amount of goods sold to the US would drop, potentially substantially, due to the higher costs passed on to customers.
The Government is most concerned about tariffs on pharmaceutical products, as they account for a huge amount of exports from the Republic to the US.
The EU had made it clear it was ready to find “mutually beneficial solutions” to the trade dispute, Mr Šefčovič told the European Parliament on Tuesday. “We now need the US to show its readiness to make progress towards a fair and balanced solution,” he said.
