Donald Trump’s global import tariff sparks EU to pause trade deal, seek clarity

Frustrated European officials have pushed for clarification on how US President Donald Trump’s declaration of a 15 per cent global tax on imports would affect the trade deal they struck with Trump as EU MPs hit pause on the deal’s ratification until they get clarity.

The European Parliament’s trade committee postponed a committee vote on ratification after Trump said he would impose the new tariff, following the US Supreme Court striking down his use of an emergency powers law to set new import taxes.

Trump then turned to another section of trade law to justify his imposition of the 15 per cent global rate, which takes effect Tuesday.

The EU position is expressed in five words: “A deal is a deal,” said commission spokesman Olof Gill.

“So now we are simply saying to the US, it is up to you to clearly show to us what path you are taking to honour the agreement,” Gill said.

The US-EU deal called for a 15 per cent cap on tariffs on most European goods imports, while tariffs on US industrial goods would be lowered to zero.

While the deal burdened consumers and businesses with a tariff increase from the previous average of 4.8 per cent, it also gave businesses certainty so they could plan - a factor credited with helping Europe avoid a recession last year.

Since the new 15 per cent rate announced Saturday would be applied on top of the previous tariffs, it would break the agreed ceiling on tariffs, said Bernd Lange, chair of the parliament’s trade committee.

MPs postponed a committee vote on the agreement scheduled for Tuesday.

Questions surrounded other trade deals done with individual countries, including Brazil, India and Britain.

For instance, Britain agreed a 10 per cent maximum tariff with the US, while India settled on 18 per cent and Vietnam accepted 20 per cent.

Although the Supreme Court decision did not directly affect bilateral deals, they were negotiated using threats of imposing the now-invalidated tariffs as leverage.

However, re-opening those deals could backfire because Trump has made clear he will pursue tariffs under other laws than the one the Supreme Court said he could not apply.

US Trade Representative Jamison Greer said Sunday on US network CBS’ that the administration had made clear to negotiating partners that Trump was intent on tariffs whether the Supreme Court ruled against him or not, that “whether we won or lost, there were going to be tariffs”.

He said that the bilateral deals “are good deals, we expect to stand by them, we expect our partners to stand by them.”

Moving from country-specific tariffs to the flat 15 per cent global tariff “will have considerable implications elsewhere,” said Atakan Bakiskan, US economist at Berenberg Bank.

The new tariff means a reduced rate for some countries, for example Brazil, which faces a reduction of nearly 15 percentage points and China, which sees a reduction of nearly 10 percentage points.

Under the law Trump relied on, these latest tariffs are in effect for only 150 days unless Congress votes to extend them.

Trump could use that time to search for other legal provisions that would support his actions.

While uncertainty hits European companies, it puts pressure on the US economy as well, where consumers and companies pay the tariffs on goods purchased from abroad.

“Uncertainty around trade policy appears here to stay - putting continued pressure on the US economy,” Bakiskan said.