EU blinks in tariff tussle with Trump, to meet his demand for no levies on US industrial goods

The European Union has decided to speed up legislation that will remove all duties on US industrial goods by the end of this week to meet US President Donald Trump’s demand to lower reciprocal tariffs on the bloc’s automobile exports.

According to a report by Bloomberg, the European Commission, responsible for the EU’s trade policy, will also offer preferential tariff rates on select seafood and agricultural products.

The bloc has said that while it has conceded to a trade agreement that favours America, it is necessary to give businesses stability and certainty amid Trump’s tariff threats. European Commission President Ursula von der Leyen has described the deal as “a strong, if not perfect deal.”

The move comes after Trump threatened to impose new tariffs on countries that “attack” American tech companies, saying that digital taxes are meant to harm the tech interests of the US.

Many countries, particularly in Europe, have levied taxes on the sales revenue of digital service providers, including Alphabet’s Google, Meta’s Facebook, Apple and Amazon. The issue has been a longstanding trade irritant for multiple US administrations.

How will the move help?

If the EU introduces the legislation by the end of the month, the 15 per cent tariff on European cars will be retroactively applied from August 1. Automobiles are among the bloc’s most valuable exports to the US, with Germany alone shipping $34.9 billion worth of new cars and parts to the US in 2024.

Cars and auto parts manufactured by the bloc currently face a 27.5 per cent tariff on exports to the US. Although the US and EU reached a trade deal to reduce American tariffs on nearly all European goods to 15 per cent, Trump stated that the lower rate would not apply to cars until legislation is introduced to eliminate industrial and other related duties.

With inputs from agencies