What You Need to Know
- Key takeaway#1
The Trump administration announced it will impose an additional 30% tariff on all products from the European Union starting August 1st.
- Key takeaway#2
The European Commission has extended the suspension of EU countermeasures to certain US Section 232 measures on steel and aluminum until August 1st.
- Key takeaway#3
The European Commission will propose EU countermeasures to IEEPA tariffs this week.
Since taking office earlier this year, the Trump administration has reignited tariff disputes between the European Union and the United States. The US has reimposed US Section 232 measures on steel and aluminum, extended the scope of these measures, and, on April 2nd, imposed IEEPA tariffs on EU products under the International Emergency Economic Powers Act. These IEEPA tariffs were then reduced to 10% until July 9th.
In response, the EU issued a list of US goods worth EUR 21 billion that would face additional customs duties as countermeasures to the US Section 232 measures. These countermeasures were then immediately suspended until July 14th to allow for negotiations.
Over the weekend of July 12th/13th, both the Trump administration and the European Commission made announcements about the ongoing tariff dispute. We go over these in this alert.
1. US measures
- On July 12th, US President Trump announced that his administration will impose an additional 30% tariff on all products from the European Union starting August 1st.
- The Trump administration also threatened to increase the tariff rate on EU products proportionally to the level of retaliation chosen by the EU.
- These 30% tariffs are separate from the sectoral tariffs (e.g., the US Section 232 measures on steel and aluminum).
However, the legal basis for these measures remains unclear. The IEEPA tariffs have been challenged in court, and on May 28th, the US Court of International Trade ruled that "IEEPA does not authorize any of the Worldwide, Retaliatory, or Trafficking Tariff Orders." On May 29th, the US Court of Appeals for the Federal Circuit entered an administrative stay pending appeal.
2. EU measures
- The Commission decided to extend the suspension of the countermeasures until August 1st.
- Commission President von der Leyen stated that the EU was still committed to working towards an agreement with the Trump administration.
- The Commission also indicated that it would adopt proportionate countermeasures if they were needed to safeguard EU interests. To that end, the Commission held a preparatory stakeholders' consultation in May, on countermeasures. This week, as the August 1st deadline approaches, the Commission will propose additional countermeasures to the EU Member States that would target EUR 72 billion in US goods.
- Despite strong advocacy from certain Member States, President von der Leyen indicated that the Commission is reluctance to use the Anti-Coercion Instrument, as EU-US trade relations are not yet in an "extraordinary situation".
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