Negotiations between the European Union (EU) and the United States look like they have a number of more weeks to go before a tariff deal is agreed, Minister for Finance Paschal Donohoe has said.
EU negotiators have been making a push to exempt certain sectors, such as aviation and spirits, from blanket US import duties, with encouraging indications of headway, one source briefed on the discussions said.
Those carve outs would be welcome news to the Government, as a win for whiskey distillers and the aircraft leasing industry.
A deadline US President Donald Trump had set for countries to sign trade deals with the US to avoid steep tariffs on imports was extended from 9th July to August 1st.
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The European Commission, the EU’s executive arm, had been rushing to ink a deal with the White House by the original deadline on Wednesday, to avoid EU states being subject to threatened tariffs of 50 per cent.
Speaking on Tuesday, Mr Donohoe said the extension likely meant “we now have a number of more weeks of negotiation to go,” before a EU-US deal was agreed.
Officials in Brussels and Dublin recognise the Trump administration will insist 10 per cent tariffs charged on European products sold into the US since April remain in place.
The negotiations are focused on heading off higher trade levies of 20 or 50 per cent being charged on trade coming from the EU.
EU and US negotiators are also exploring a proposal that European car manufacturers could offset some portion of import levies they would be charged, based on the size of their manufacturing footprint in the US, although the details of how such a scheme would work are vague, one EU source said.
It is accepted that any deal will be an “agreement in principle,” that leaves many of the complex and contentious details to be worked out at a later point.
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Economic planning by the Government for next year’s budget “will have to assume the presence of tariffs”, Mr Donohoe said. “It does look likely that tariffs are going to be a part of the new trading relationship that we will have with the US,” he said.
“I hope the negotiations that are under way in some way lessen their effect and their level with regard to particular sectors,” the Fine Gael minister said.
The Government had made its case to the commission, who is leading the EU negotiations, about “a number of sectors that are particularly important to the Irish economy,” he said.
“Our assessment is that the negotiation is still ongoing and that we are not at the point where a deal has been done,” Mr Donohoe said.
Some divisions are emerging between those who believe the EU should get a quick deal over the line at nearly any cost, and others who are concerned about locking the bloc into terms overly favourable to the US.
“We have to weigh up whether the benefit we get in uncertainty lifting is outweighed by the costs that could be created by the nature of the agreement itself,” Mr Donohoe said. He was speaking in Brussels after attending a meeting of EU finance ministers.
The economic disruption and uncertainty caused by the transatlantic trade dispute would be a factor in the Government’s budget planning, he said.
There was a need to move away from the giveaway budgets of recent years, characterised by one-off measures to help people with their high cost of living, towards “a more normal” budget, Mr Donohoe said.
“We do have to bring to conclusion the budgets that we had when inflation was so high,” he said. “With all the economic uncertainty that we are in and the fact that that is likely to continue for some time, we have to move how we plan our budgets now into a different place,” he said.
The expansive budget packages of recent years had come at a time when the rate of inflation was around 10 per cent, “as opposed to where it is now at 2 per cent,” Mr Donohoe said.
