EU-US Deal Set To Lower Car Tariffs

EU-US Deal Set To Lower Car Tariffs

On Thursday, European Union trade commissioner Maros Sefcovic unveiled a joint EU-US statement that details a framework trade agreement, under which approximately 70% of EU exports will incur a 15% tariff.

"This is a significant, strategic agreement, and we are fully supportive of it. A diverse array of sectors, including key industries such as automobiles, pharmaceuticals, semiconductors, and lumber, are poised to gain from this," Sefcovic stated during a press conference in Brussels.

The announcement of the tariff deal in July received mixed reactions, with both commendations and criticisms. European Commission President Ursula von der Leyen remarked that it provided "stability" and "predictability" for transatlantic trade. In contrast, French Prime Minister Francois Bayrou expressed that the deal represented the EU's "resignation to submission."

While the 15% tariff rate may seem minor compared to the 30% that US President Donald Trump had previously threatened, it remains significantly higher than the 2.5% rate that was in effect before Trump took office again in January.

Additionally, the agreement stipulates that the European Union is anticipated to acquire $750 billion (€646 million) worth of US liquefied natural gas, oil, and nuclear energy products by 2028.

Lower tariffs on EU automobiles to be applied retroactively.

Regarding European car exports, a sector vital to the German economy, the 15% US tariff rate is not yet finalized.

Currently, the US imposes a tariff rate of 27.5% on EU cars imported into the country. The US has indicated it will reduce the tariffs on EU cars to 15% once the EU initiates a legislative process to ease imports of specific US goods.

This will involve eliminating EU tariffs on US industrial products and dismantling barriers to certain food imports. According to the agreement, the EU will need to relax its restrictions on processed fruits and vegetables, along with other processed food items from the US.

Sefcovic mentioned that the Commission is "working diligently" to expedite the completion of this process.

The commissioner stated that he received confirmation from his US negotiating counterpart that the reduced rate for vehicles will be effective retroactively from August 1.

 

 

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