EU-US Trade Agreement Revamp Threatens Fragile Truce, Sparks Concerns

Concerns Rise Over Future of EU-US Trade Agreement

Calls from a majority of political parties in the European Parliament to revise the EU-US trade agreement have sparked concerns that the fragile trade truce between the two sides could collapse. As part of the agreement reached in July, the EU pledged to reduce tariffs on some US goods, while the European Parliament needs to vote to approve this tariff reduction. Currently, the US imposes a 15% tariff on most EU exports.

In a meeting Wednesday afternoon with Sabine Weyand, a senior EU trade official, lawmakers criticized the outcome of the negotiations, calling it "unilaterally biased towards the US."

Bernd Lange, chair of the European Parliament's trade committee, stated that the agreement could be amended during the legislative approval process.

"There are many problems at the moment, and I expect there will be some amendments," he said.

Lange pointed out that the EU should accelerate efforts to reduce the tariffs imposed by the US on European steel and aluminum products – which remain as high as 50%, and also apply to metal components of bicycles, cranes, and other products.

He and other MEPs also suggested adding a "sunset clause": unless explicitly extended, the EU's tariff concessions to the US would automatically expire at a specific time. The tariff reduction pledged by the EU applies to all US industrial imports and some agricultural products.

Kathleen van Brempt expressed her party's, the Socialist and Democrats Group's, opposition to the agreement, saying it was "not beneficial to the EU" and "violates World Trade Organization (WTO) rules because it provides tariff concessions to the US that other countries cannot obtain." "We will not hastily approve this agreement," she added.

Martin Schirdewan, co-chair of the Left Group, described the EU as having "made compromises." "Consumers will pay higher prices, industry will suffer losses, and jobs will be reduced," he said.

Thierry Mariani, from the far-right, echoed this view. The French far-right National Rally MEP described the EU as "weak" and that "President Trump directly set the conditions."

Anna Cavazzini, a Green MEP, pointed out that Trump threatened to impose new tariffs after signing this non-binding agreement: "For me, it is clear that the stability we had hoped for from the agreement does not exist at all."

Last month, Trump threatened to impose retaliatory tariffs or impose export controls on other countries if their taxes or laws "discriminate against American tech companies."

MEPs from the liberal Renew Group also criticized the agreement.

These five party groups hold 396 of the 725 seats in the European Parliament.

However, national leaders fearing a transatlantic trade war may pressure MEPs from their political parties to support the agreement in the final vote.

Weyand said that the conditions obtained by the EU were "better than those obtained by other US trade partners." Including existing tariffs, the US imposes a 15% tariff on most EU exports; car tariffs have fallen from 27.5% to 15%. Before the agreement was finalized in Scotland at the end of July, Trump threatened to impose a 30% tariff on all European goods if an agreement was not reached.

Weyand also cited data showing that in the second quarter, under the temporary mechanism in which the US imposed tariffs of nearly 15% on European goods (excluding cars), EU exports to the US did not decline.

"The US cannot produce all these goods on its own, and now the prices of these imports have been raised," she said.

"Any negotiation must consider 'what is the alternative'," she concluded, adding that preventing the EU from fulfilling its promise to reduce tariffs could lead to "a trade conflict, and the risks could escalate uncontrollably."

The Broader Economic Context

It's important to note that trade disputes can have ripple effects throughout the global economy. While this specific agreement focuses on tariffs, other non-tariff barriers, such as regulatory differences, also play a significant role in international trade. Understanding these complexities is key to appreciating the potential impact of any changes to trade agreements.