EU warns that Trump’s new tariff policy breaks trade agreement

[BRUSSELS] A European Union assessment found that US President Donald Trump’s new tariff policy will increase levies on some of the bloc’s exports, including cheese and some agricultural products, above the level permitted in their trade agreement.

After the US Supreme Court struck down Trump’s use of an emergency-powers law to impose his so-called reciprocal tariffs around the world, he announced a new 10 per cent global levy, which he then threatened to increase to 15 per cent.

The European Commission, which handles trade matters for the bloc, told lawmakers on Monday (Feb 23) that the new global tariff will be added to levies that are already in place, according to Bernd Lange, chair of the European Parliament’s trade committee.

The new cumulative rate means some goods would be above the 15 per cent ceiling that the EU and US agreed to in their trade deal.

Under Trump’s new tariff programme, some products, including butter, plastics, textiles and chemicals, would have levies above that 15 per cent ceiling, according to sources familiar with the commission’s assessment. The new global tariffs can stay in place for as many as 150 days.

Commission spokesperson Olof Gill declined to comment on the assessment.

The EU-US trade deal, struck last summer between Trump and European Commission President Ursula von der Leyen, would impose a 15 per cent tariff rate on most EU exports to the US while removing tariffs on many American goods heading into the bloc. The US would also continue to impose a 50 per cent tariff on European steel and aluminium imports.

The bloc agreed to the lopsided deal in the hopes of avoiding a full-blown trade war with Washington and retaining US security backing, particularly with regards to Ukraine.

European Parliament suspended legislative work on approving the EU-US accord on Monday, requesting clarity on Trump’s new trade policy.

SEE ALSO

EU trade keeps taking hits from US tariffs and Chinese competition, data shows

EU to offer US critical minerals partnership to check China

EU proposals set to limit EV sales from 2035, says campaign group

Maros Sefcovic, the bloc’s trade chief, spoke with US Trade Representative Jamieson Greer and Secretary of Commerce Howard Lutnick over the weekend and delivered a report to European lawmakers and a group of EU ambassadors on Monday.

Sefcovic told them that a transition period of up to four months may be necessary to work out the details of the new trade policy, according to sources familiar with his remarks.

Many of the ambassadors who spoke at the meeting indicated that they wanted to stick to the trade deal despite the uncertainty created by the court decision, said the sources, who spoke on the condition of anonymity.

Both sides have indicated they want to stick to the trade deal but it’s still unclear how they will be able to do this – and how quickly, some of the sources said. BLOOMBERG