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Yesterday, after meeting with European Commission President Jean Claude Juncker, President Trump announced that the United States has reached an agreement with the European Union in principle, which would formally begin the negotiation process with an aim to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. Barriers would be reduced and trade is services, chemicals, pharmaceuticals, and agricultural products will increase. The EU would immediately increase imports of U.S. soybeans, along with an increase in imports of U.S. liquefied natural gas (LNG). Both parties would resolve the steel and aluminum tariffs as well as other retaliatory measures as part of the negotiation process.
The duo announced that all the tariffs would be on hold unless one party stops the negotiation process. Mr. Juncker said during the press conference, “We agreed to establish a dialogue on standards. As far as agriculture is concerned, the European Union can import more soybeans from the U.S., and it will be done. And we also agreed to work together on the reform of the WTO. This, of course, is on the understanding that as long as we are negotiating, unless one party would stop the negotiations, we will hold off further tariffs, and we will reassess existing tariffs on steel and aluminum.”
However, we believe that President Trump would move ahead with his planned tariffs on auto and auto parts import as the Commerce Department is widely expected to publish its findings soon. He would move ahead with the tariffs as it would impact big exporters like Japan, Mexico, South Korea, Canada, and the Czech Republic and may force them to enter into negotiations with the United States. President Trump has long been fiercely critical of companies leaving the United States and moving to Mexico.
In addition to that, the tariffs would keep the pressure on the EU to reach an agreement, though they will be granted exemptions as part of the negotiating process.
