The Taoiseach has expressed significant concern over the potential consequences of US President Donald Trump’s threat to impose 50% tariffs on the EU starting in June, stating that such a move would be “very damaging.”
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Following Mr. Trump’s announcement, European stocks experienced a sharp decline, and the euro saw a drop in value. Additionally, eurozone government bond yields fell considerably, indicating a ripple effect across global markets.
On his Truth Social platform, Mr. Trump remarked, “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with,” adding, “Our discussions with them are going nowhere!”
Addressing the situation in Cork, Micheál Martin described Mr. Trump’s announcement as a surprising development, especially given the expectation of a “pause until early July.” He emphasized that “everyone in the EU is acting in good faith and wants a negotiated settlement with the United States,” highlighting the dynamic trading relationship between the two entities.
Martin underscored the potential fallout, stating, “Tariffs of that height [50%] would be extremely destructive and would create even wider disruption across the global economy.” He further noted, “Tariffs are not good for economies; they are not good for consumers or workers. A negotiated pathway is the only way forward.” He assured that “the European Union is prepared to act in good faith with the US” to find a resolution.
The turbulence caused by Mr. Trump’s dual threats unsettled global markets, which had recently experienced a period of de-escalation. The S&P 500 dipped by 0.9% in early trading, while the Nasdaq fell by 1.5%, and European shares decreased by 1.1%. Notably, shares of Apple Inc. fell by 2.5% as trading commenced in New York.
The European Commission is seeking clarification from the US, with discussions planned between trade officials from Brussels and Washington. The Commission stated it would refrain from commenting on the tariff threats until after a conversation between European Trade Commissioner Maroš Šefčovič and US Trade Representative Jamieson Greer.
Holger Schmieding, chief economist at Berenberg Bank, remarked, “This is a major escalation of trade tensions. With Trump, you never know. But this would be a major escalation, and the EU would have to react; it would really hurt both the US and European economies.”
Currently, the EU faces 25% tariffs on its steel, aluminum, and cars from the US, alongside reciprocal tariffs of 10% on almost all other goods. This rate is slated to increase to 20% when Mr. Trump’s 90-day pause concludes on July 8. Washington justifies these tariffs as measures to counteract the US’s significant goods trade deficit with the EU, which amounted to nearly €200 billion ($226.48 billion) last year, according to Eurostat.
Interestingly, the US holds a substantial trade surplus with the EU in services. Recently, Washington provided Brussels with a list of demands aimed at reducing the deficit, including the adoption of US food safety standards and the removal of national digital services taxes.
In response, the EU has proposed a mutually beneficial agreement, which could entail both sides moving towards zero tariffs on industrial goods, an increase in the EU’s purchase of liquefied natural gas and soybeans, and collaborative efforts to address steel overcapacity arising from China.
The scheduled discussion between Šefčovič and Greer follows these exchanges and is aimed at laying the groundwork for a potential meeting in Paris in early June. Michal Baranowski, Poland’s deputy economy minister, indicated that the 50% tariff threat could be a “negotiating ploy,” suggesting that public statements may not always predict US administrative actions.
The European Commission has consistently expressed its preference for a negotiated resolution while also preparing countermeasures should negotiations falter. It initially implemented and subsequently suspended duties on €21 billion of annual US imports in response to US metals tariffs and has compiled a list of €95 billion in US goods for potential countermeasures against US tariffs.
Earlier, Tánaiste Simon Harris emphasized the need for Ireland and the EU to pursue a “negotiated settlement” regarding tariffs. In a statement, he reiterated that “we need a substantive, calm, measured, and comprehensive dialogue” with the US. He also noted that tariffs are “bad for Ireland, the EU, and the US,” as they are likely to “push up prices for consumers and businesses,” stressing the necessity for a sensible solution.
“A negotiated solution remains very clearly the goal and the preferred outcome,” asserted Harris.
Additional reporting by Reuters.
Edited By Ali Musa
Axadle Times International – Monitoring.
