TMTPOST -- The European Union is taking advantage of the extended time window to settle a framework trade deal with U.S. that allows certain exemptions or concessions for tariffs on key sectors, according to reports on Monday.
Credit：China Central Television
The Trump administration will not send letters to the EU about higher tariffs as the bloc was close to an agreement with the U.S., Reuters cited European sources on Monday. It was reported the EU is eyeing possible exemptions from the current 10% baseline tariffs. The EU-U.S. agreement could reportedly involve limited concessions to the baseline tariffs for aircraft and parts, some medical equipment and spirits.
The news, if it is accurate, suggests the EU is spared under the new round of tariffs set to go in effect on August 1. U.S. President Donald Trump said on April 9 that he has authorized a 90-day pause and 「a substantially lowered reciprocal tariff」 of 10% during this period, both effective immediately. The President on Monday signed an executive order, delaying the tariff deadline on July 9, Wednesday, to August 1.
Trump on Monday also posted letters dictating tariffs on 14 countries, ranging from 25% to 40%. The U.S. will impose these new tariffs on all imports from Japan, South Korea, Kazakhstan, Malaysia,Tunisia, South Africa, Bosnia and Herzegovina, Indonesia, Bangladesh, Serbia, Thailand, Cambodia, Laos and Myanmar, starting on August 1, separating from all existing sectoral tariffs, and goods transshipped to evade a higher tariff will be subject to that higher tariff.
Companies in Japan or South Korea will be exempted from the new tariffs if they decide to build or manufacture goods in the United States, Trump said in his letters posted on his social media Truth Social Monday. 「If for any reason you decided to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge,」he warned.
The EU is seeking to conclude a preliminary trade deal with the U.S. this week to lock in a 10% baseline tariff rate beyond August 1, Bloomberg reported on Monday. The bloc is also looking for exemptions from the 10% tariffs for certain key products, including aircraft and its parts, and spirits, the report quoted sources.
The EU was said to be pushing for quotas and exemptions on U.S. sectoral tariffs, including 25% levies on automobile and car parts and the 50% levies on steel and aluminium. The EU and the U.S. are discussing a so-called offsetting mechanism that would allow European companies that make automobiles in the U.S. to export a certain number tariff free, per the report.
Earlier Monday, the EU said it is working towards securing a framework deal with the U.S. before Trump』s previous July 9 deadline. 「We are continuing to work towards the deadline of the 9th of July and in that sense, political and technical level contact between the EU and U.S. continues,」 said Olof Gill, a spokesperson for the European Commission, which is in charge of leading trade talks for the EU as a whole.
Gill said that 「substantial progress」 was made on securing a EU-U.S. agreement in principle after the EU』s trade chief. European Trade Commissioner Maros Sefcovic talked with American counterparts last week. He also said European Commission President Ursula von der Leyen and Trump had a good exchange during their phone call on Sunday. 「We』re fully geared up to get an agreement in principle by Wednesday and we』re firing on all cylinders to that effect,」 Gill said.
Portuguese Finance Minister Joaquim Miranda Sarmento the same day said the EU and the U.S. could strick e a deal with very low tariffs and the tariff rates are 「probably less than 10%, but let』s see what』s the outcome.」
