Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Meetings between EU and US trade negotiators will go ahead as planned next week despite a US court’s rebuke of President Donald Trump’s tariff agenda.
The latest talks between EU trade commissioner Maroš Šefčovič and his US counterparts, scheduled to take place on the sidelines of the OECD ministerial meeting in Paris next week, were still expected to go ahead, EU officials said, even though the US Court of International Trade ruled that Trump’s “liberation day” tariff programme was illegal.
The ruling affects duties announced by Trump on April 2, including a baseline 10 per cent tariff. Sectoral levies on imports of cars, steel and aluminium from the EU at 25 per cent remain in place.
The court’s reprieve comes at a critical time after a stand-off between the EU and US led Trump last Friday to declare a 50 per cent blanket tariff rate on goods from the bloc, which he subsequently pulled back from following a call with European Commission president Ursula von der Leyen.
As the Financial Times reported, the commission had told member states on Monday that the 10 per cent “reciprocal” tariff rate was likely to stay, marking a step-down from its more hardline position.
The EU was also preparing to offer to slash regulation in some areas that are of concern to US businesses, according to people briefed on Monday’s meeting. The bloc has already started to undertake a wide-ranging effort to simplify laws and cut back on red tape.
The 10 per cent duty affected about 70 per cent of EU exports, worth around €380bn. Before Wednesday’s ruling, the US had insisted that the 10 per cent rate was non-negotiable.
Members of the European Parliament’s trade delegation are currently in Washington to meet with US departments for trade and agriculture, as well as US business groups.
Brando Benifei, an Italian MEP on the trip, said that the delegation had discussed the possible impact of the court ruling but that they “were caught a bit by surprise by this bomb”.
“This is something that convinces me even more that the EU has to stand strong on its feet in demanding a reasonable and constructive and a reciprocally useful deal because the position of [the] US seems now under some pressure,” he said.
Benifei added that he saw positive momentum towards agreement in areas such as energy and alignment on securing supply chains in the face of Chinese competition.
Former EU trade official Ignacio García Bercero, now at the Bruegel think-tank, said it would be “a mistake” if the EU used the court ruling as an excuse to back away from negotiations.
Discussions should now focus “fundamentally” on the steel, aluminium and car tariffs as “for the rest now there is no point”. The EU should look at finding a solution for sectors still affected and “look into issues of how the EU and US can co-operate on issues relating to overcapacity and subsidies”, Bercero said.
Should the EU back off, Joost Pauwelyn, a partner at the Brussels office of law firm Cassidy Levy Kent, said that the ruling could “in some perverse way” cause an escalation in the US-EU trade war.
“Trump could do the same thing through all sorts of domestic law. He will double down, the EU will relax and there will be less chance of a deal. And then there will be an escalation,” he said.
The commission should use the time while the US side was weakened to “minimise what [tariffs] they will get”, Pauwelyn added.
Former UK trade official Allie Renison, now at consultancy SEC Newgate, said the ruling had created more uncertainty for US trading partners.
“US trading partners may consider recalibrating their negotiating approach, but are still going to want some basis of certainty given sectoral tariffs still can do considerable damage to trade,” she added.
An EU diplomat close to the trade discussions said that the ruling had bought the EU time. “I don’t think we need to rush,” the diplomat said.
The commission declined to comment on the US court judgment.
