Import tariffs – what’s the agreement? You’ve probably heard about it by now: the US and EU have – at last – come to an agreement regarding the import tariffs on both sides. But what does it actually mean?
A big day for tariffs
The announcement comes months after Trump first threatened to heavily tax steel and aluminum exports. Now, both parties have agreed that zero tariffs are the way forward, including “zero non-tariff barriers and zero subsidies on non-auto industrial goods”.
Firstly, the deal is more of an agreement for the future, than an instant decision. Although Trump unsurprisingly declared it ‘a big day’ for free and fair trade, the agreement is that both the US and EU are going to work towards that goal, they have a long way to go. As part of the tariff agreement, the EU and US will also work toward eliminating unfair trade practices and reforming the World Trade Organization. A second thing the parties agreed on involves soy beans and liquefied natural gas. At the press conference, Trump stated “the European Union is going to start almost immediately to buy a lot of soybeans – a tremendous market.” Apart from the soybean and LNG markets, there is no need to get excited about this agreement, yet.
However, this is not the end of the discussion. Essentially, it means that negotiations will continue, in the spirit of this first tariff agreement, unless either party decides to end the talks. Until then, both Juncker and Trump promised to hold off on other tariffs.
Perhaps the most interesting part of this new agreement is how much it lacks detail: it simply means that the two sides will continue talking and negotiating, but doesn’t actually say much about the process itself or the outcome thereof. The end goal is to create greater wealth for both the US and the EU, and to ensure a more equal balance between the two markets.
Need more info?
For more information on these topics, you can read this explanation from the BBC about trade wars, this one from CNN or this one from the Guardian. If you would like to chat about what this tariff agreement means for your American organization exporting to Europe, feel free to get in touch and plan a call with our CEO, Mark de Vries.