EU's Strategic Response to Trump's Tariff Threats
The deadline is approaching, and the EU faces the threat of massive tariffs from Trump. However, the union has a counter-strategy ready, targeting politically sensitive areas.
"We fully support the EU Commission," says Trade Minister Benjamin Dousa (M) to TT.
The three-month reprieve Trump granted the world after the tariff shock in April is nearing its end. So far, only the UK and Vietnam have signed trade agreements with the USA.
For Sweden, it is the EU that handles the negotiations and can sign any potential agreement with the USA.
If no agreement is reached before the deadline on July 9, Donald Trump has threatened to raise the current general tariffs from 10 percent to 50 percent.
Trade Commissioner Maroš Šefčovič has been in Washington this week, meeting with Trump's staff on behalf of the EU.
Trump's Three Categories
According to the EU Commission, "progress towards an agreement" has been made, but no final proposal is on the table.
Politico reports that Trump will categorize the USA's trading partners into three categories after July 9:
- A provisional agreement is reached, and current tariffs remain in place for now.
- Negotiations continue, and tariffs are raised to the originally intended levels from April before Trump's pause (20 percent for the EU).
- The penalty category: substantial general tariffs—up to 50 percent—that remain until progress is made in negotiations.
EU Commission President Ursula von der Leyen has already stated that there is too little time until July 9 to achieve a comprehensive trade agreement.
The hope is instead for a "principle agreement" that would place the EU in category 1.
Negotiations will continue over the weekend. In addition to the basic level, discussions will cover possible reliefs for specific areas, including the automotive industry, which is already subject to higher tariffs, according to Politico.
EU Prepares for All Scenarios
Even though the European side hopes for a favorable agreement, they are ready for all scenarios, several international media report.
If Trump and the USA choose to wield the big hammer, the EU is ready to respond with tariffs targeting politically sensitive issues for Trump, Bloomberg writes.
Tariffs worth over 200 billion SEK have been approved and ready since April, targeting sensitive areas for Trump, such as agricultural products. Soybeans from Louisiana, where House Speaker Mike Johnson is based, are mentioned.
The EU has also prepared a list of tariffs worth around 1 trillion SEK to respond if a full-scale trade war with the USA ensues, Politico writes.
Swedish Trade Minister Benjamin Dousa said on Friday that nothing is finalized yet.
"The priority is to reach a negotiated solution, while the EU prepares for countermeasures if no agreement can be reached with the USA," said Swedish Trade Minister Benjamin Dousa in a comment to TT on Friday.