Trump’s 30% tariff on Europe would effectively knock out transatlantic trade, says EU trade chief

London
CNN
 — 

The European Union has warned that its trade with the United States could be effectively wiped out if Washington makes good on its threat to slap a 30% tariff on goods imported from the bloc.

A tariff of “30%, or anything above 30%… has more or less the same effect. So, practically it prohibits the trade,” Maroš Šefčovič, the EU’s trade commissioner, said as he arrived ahead of an EU ministerial meeting in Brussels on Monday.

Šefčovič said it will “be almost impossible” for the bloc to continue its current level of trade with America if that new tariff rate is implemented on August 1 – the date stipulated by US President Donald Trump in his letter to the EU on Saturday.

“If (the tariff) stays 30 (percent) plus, simply trading as we know it will not continue, with huge negative effects on both sides of the Atlantic,” he added. “I will definitely do everything I can to prevent this super-negative scenario.”

The EU-US trade relationship is mighty. According to the European Council, EU-US bilateral trade in goods and services was worth €1.68 trillion ($1.96 trillion) last year. Together, the partners represent nearly 30% of global goods and services trade, per the Council.

But Trump has repeatedly rebuked the EU for what he sees as unfair trading practices, saying in April that the 27-nation bloc was “formed to screw” America. He has pointed to EU tariffs on US goods as well as several “non-tariff barriers” such as taxes on digital services to support that view.

Since re-taking office in January, Trump has hiked – and threatened to hike – tariffs on countries around the world to help eliminate the US’ trade deficit, bring manufacturing jobs back to America and bring foreign nations to heel on key disputes.

For months, EU trade officials have been negotiating with their US counterparts to avoid Trump’s tariffs, or to limit their damage. But after the US president threatened in May to jack up the rate of his so-called “reciprocal” levy on EU goods from 20% to 50%, the bloc accelerated talks.

Šefčovič reiterated on Monday that the EU seeks a negotiated solution as well as his belief that one had been within touching distance before Trump’s latest tariff salvo. “The feeling on our side was that we are very close to an agreement,” he said, noting that the bloc is demonstrating “enormous” levels of patience and creativity to secure a deal.

On Sunday, the EU said it will delay the implementation of planned countermeasures on €21 billion ($25 billion) worth of US exports from Monday until early August to allow more time to negotiate an agreement. Those countermeasures are in retaliation for the 25% tariff Washington has slapped on all steel and aluminium imports.

Lars Løkke Rasmussen, Denmark’s foreign minister, said the bloc wants a fair deal and that it should prepare to retaliate.

“If you want peace, you have to prepare for war, and I think that’s where we are. So, of course, we shouldn’t impose countermeasures (at) this stage, but we should prepare to be ready to use all the tool in the toolbox,” Rasmussen said before the meeting of EU trade ministers on Monday.

European stocks were falling Monday morning in the first day of trade since Trump issued his new tariff threat over the weekend. The Stoxx Europe 600, the region’s benchmark index, was trading 0.27% lower by early afternoon CET.