US president Donald Trump’s threatened tariffs of 30 per cent would realistically cut off the European Union’s ability to keep trading with the United States as it has done for years, the union’s top negotiator has said.
The EU is weighing up how to respond to a letter from Mr Trump stating he plans to raise tariffs on goods coming from the EU to 30 per cent on August 1st in a serious setback to hopes of Brussels and Washington agreeing a quick tariff deal.
Minister for Finance Paschal Donohoe said it was still possible for the EU and the Trump administration to reach an agreement on trade by the beginning of August. Speaking on Monday, he said the negotiations were at a sensitive stage.
“It is evident that the application of tariffs at a high level would be bad for the economic growth of Ireland and would affect our job creation, potential,” Mr Donohoe said. “What the exact effect could be would depend on what exactly level of tariffs could be, and at this moment in time, with all the unpredictability, it is very difficult to forecast.”
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EU trade commissioner Maros Sefcovic, who has been leading negotiations for the bloc, said blanket tariffs of 30 per cent would practically “prohibit” the future flow of trade from Europe to the US.
“It will be almost impossible to continue trading as we are used to in a transatlantic relationship,” Mr Sefcovic said on Monday.
European businesses have paid 10 per cent tariffs on goods sold into the US since early April, with steel products and cars subject to higher levies.
Commission officials and national diplomats spent the weekend trying to gauge whether the latest move by Mr Trump is a negotiating tactic, or if he seriously intends to triple import duties from August 1st.
Mr Sefcovic said EU and US negotiating teams had been “very close” to a preliminary trade agreement. The outline of that agreement-in-principle would have seen the EU accept the existing 10 per cent tariffs, with exemptions for some sectors.
The long-time Slovakian commissioner said last week he believed the two sides were “almost there” on a tariff deal.
The threat of 30 per cent US import duties from the start of next month introduced a “totally different dynamic” to discussions, Mr Sefcovic said.
“We must prepare for all outcomes, including – if necessary – well considered, proportionate countermeasures to restore the balance in our transatlantic relationship,” he said.
The European Commission is expected to reveal details of a second package of retaliatory tariffs the EU would levy on US products, in the event talks fail.
The package is believed to target around €72 billion worth of US trade, revised down from €95 billion after national capitals lobbied to prevent certain sectors being dragged into the tariff dispute.
Those measures would come on top of a €21 billion package of EU tariffs on US steel, soybeans and other products, which have been paused while talks continue.
“President Trump has said that he wants to conclude a lot of trade agreements, and I think we should take him at his word on that. We want to conclude a trade agreement,” said Minister of State for European affairs Thomas Byrne.
Mr Byrne, who is representing Ireland at a meeting of EU trade ministers in Brussels, said there was still time to agree a deal before August 1st.
“That’s the space we should be in, working to make sure that we can benefit mutually, not destroy ourselves,” he said of the EU-US talks.
France’s junior minister for trade, Laurent Saint-Martin, said the EU needed to restore the “balance of power” with the US in the talks.
Europe did not want a trade war with the US, Denmark’s foreign minister Lars Løkke Rasmussen said. “It will be devastating not just for the Americans, but also for Europe, so we don’t want to escalate things,” he said on his way into the meeting.
