US, EU lock in trade deal; US official sees car tariff relief in weeks
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US President Donald Trump (right) meeting European Commission president Ursula von der Leyen, in Turnberry, Scotland, on July 27.
PHOTO: REUTERS
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WASHINGTON - The US and the European Union on Aug 21 locked in a framework trade deal reached in July that includes a 15 per cent US tariff on most EU imports, including cars, pharmaceuticals, semiconductors and lumber.
In a 3½-page joint statement, the two sides listed the commitments made, including the EU’s pledge to eliminate tariffs on all US industrial goods and to provide preferential market access for a wide range of US seafood and agricultural goods.
Washington will take steps to reduce the current 27.5 per cent US tariffs on cars and car parts, a huge burden for European carmakers, once Brussels introduces the legislation needed to enact promised tariff cuts on US goods, it said.
US President Donald Trump and European Commission president Ursula von der Leyen announced the deal on July 27 at Mr Trump’s luxury golf course in Turnberry, Scotland, after an hour-long meeting that followed months of negotiations.
The two leaders met again this week as part of negotiations aimed at ending Russia’s war in Ukraine, with both lauding their trade framework deal as a historic accomplishment. The joint statement said the deal could be expanded over time to cover additional areas and further improve market access.
A senior administration official, speaking on condition of anonymity because they were not authorised to speak publicly, said European carmakers could see relief from the current US tariffs within “hopefully weeks”.
“As soon as they’re able to introduce that legislation – and I don’t mean pass it and fully implement it, but really introduce it – then we will be in a position to provide that relief. And I will say that both sides are very interested in moving quickly,” the official said.
The joint statement was “a play to hold each other accountable” and ensure that both sides carried out the pledges announced in July, the official added.
“We are trying to sequence with the European Union to make sure that... they feel sufficient pressure to obtain the mandate they need to begin the legislative process for reducing their tariffs, as they’ve promised,” the official said.
“We’re confident that they’ll do that. It’s just good for all parties to make sure that everyone’s on the same page and taking actions around the same time.”
The statement said US tariff relief on cars and car parts would kick in on the first day of the month in which the EU introduced the legislation, offering the prospect of retroactive relief for carmakers. It was not immediately clear when Brussels would start the legislative process.
The joint statement noted that the US agreed to apply only Most Favored Nation tariffs from Sept 1 on EU aircraft and parts, generic pharmaceuticals and ingredients, chemical precursors and unavailable natural resources, including cork.
It reiterated the EU’s intention to procure US$750 billion (S$965 billion) in US liquefied natural gas (LNG), oil and nuclear energy products, plus an additional US$40 billion of US-made artificial intelligence chips.
It also repeated the intention for EU companies to invest an additional US$600 billion across US strategic sectors until 2028.
Both sides committed to address “unjustified digital trade barriers”, the statement said, and the EU agreed not to adopt network usage fees.
They also agreed to negotiate rules of origin to ensure that the agreement’s benefits accrued predominantly to both trading partners.
In addition, they said they would consider cooperation to ring-fence their respective steel and aluminium markets from overcapacity, while ensuring secure supply chains between each other, including through tariff quotas. REUTERS
