What the EU is making ready to retaliate to Trump customs tariffs | EUROtoday

C‘is the weapon that Brussels didn’t suppose it had to attract towards Uncle Sam. Adopted on November 22, 2023, the European EU Economic Anticcition Regulation might expertise its baptism of fireside within the face of the commerce struggle launched by Donald Trump. The European Commission, which hitherto superior on tiptoe, now has its authorized arguments to arrange a proportionate response.

At the top of the General Directorate of Commerce of the European Commission, Sabine Weyand has been working, for a number of months, on the assorted situations. The laws in query give the European Union an unprecedented capability for response to the financial pressures exerted by third nations. A formidable weapon, initially designed to make Faced with Chinese intimidation…Read too Trump launched his commerce struggle towards Europe

How does this anticocition system work concretely? First, in keeping with article 4 of the regulation, the Commission should look at whether or not the American customs duties are certainly a type of financial coercion. For this, it has “normally” of an examination interval “not exceeding four months” to find out if Washington seeks, by these industrial measures, to acquire a change of coverage from Europeans.

Trump’s speeches present ammunition to the EU

Article 2 exactly defines financial coercion. This is the case the place “a third country applies or threatens to apply a measure affecting trade or investment in order to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a Member State”. This clarification is way from being a easy authorized formality.

“It will be necessary to prove that Trump is not content to protect the American industry, but that he uses these prices as a lever to obtain political concessions,” analyzes an skilled in worldwide commerce. The shattering statements of the American president throughout his marketing campaign might paradoxically facilitate this demonstration. By clearly linking his pricing threats to European contribution necessities to NATO, Trump himself offered ammunition to European attorneys.

And since then, he continues: by designating VAT as absolute evil, he calls for a change in European taxation which has nothing to do with import-export, since European corporations all pay VAT. He aggravates his case when he mentions the questioning of the selections of the CJEU – an impartial decide – towards Apple. “” If Trump applies costs to the EU as a result of he doesn’t like VAT or such or such textual content regulating digital companies, we’re 100 % within the area of coercion, “confirms Jean-Luc DeMarty, the former director general of trade of the European Commission.

Article 2, paragraph 2 of the regulation also specifies the criteria to be taken into account, in particular “the depth, the severity, the frequency, the length, the magnitude and the significance of the measure of the third nation” and if it “encroaches on an space of ​​sovereignty of the Union or a Member State”. We’re right in it!

An essential mediation phase

Once the coercion has been established, the procedure accelerates. In accordance with article 5, paragraph 5, the council must approve the qualified majority the determination of coercion. Article 6 then provides for a compulsory phase of engagement with the third country, where “the Commission supplies an enough alternative for consultations” to try to resolve the amicable dispute, in particular by “direct negotiations”, “the submission of the dispute to worldwide arbitration” or “mediation”.

But, without result under a “cheap time”, article 8 authorizes the Commission to take the ultimate stage: the adoption of “union response measures” by means of acts of execution. Annex I of the regulation offers an impressive palette of retaliatory means. There are ten in total in number. Article 8, paragraph 2 specifies that the Commission selects the “applicable” measures among these: targeted customs duties, restrictions on the import or export of goods, restrictions on access to European public procurement, limitations on certain financial services … The EU has provided for a graduated and flexible arsenal.

In 2018, faced with the prices on steel and aluminum imposed by Trump during its first mandate, Europe had retaliated by targeting emblematic products, as Harley-Davidson motorcycles or the bourbon of Kentucky. The list was much longer but the general public only retained these two.

This time, the approach could be more surgical. According to article 8, paragraph 3, response measures can be adopted either as “normal utility measures” or as measures “which apply to sure pure or authorized individuals” linked to the government of the third country. This flexibility allows the Commission to target precisely the sensitive sectors in the key states that have brought Trump to power. Which had been the case in 2018.

A loser-lording bet

The difficulty for Brussels remains to find the right balance. Article 11 requires that “proportionate” measures which “don’t exceed the extent of harm induced to the union”. A too shy response would encourage Trump to continue his pressure strategy. But overly aggressive countermeasures could trigger a spiral of reprisals with the incalculable consequences for the European economy. European exports to the United States amount to more than 500 billion euros per year. A frontal trade war with Washington would be a losing-perceive game.

There remains an unknown: the political courage of the institutions. Ursula von der Leyen Will she dare to take out the EU’s arsenal in front of a Trump who does not even calculate it! For the time being, the Commission gives itself the time of reflection, especially as voices are raising, from Giorgia Meloni to Christine Lagarde, the president of the ECB, to warn against a response which would hurt Europe than in the United States.

European unity to the test

The other challenge for Europe remains its unity. Member States, with sometimes divergent interests, will have to overcome their national reflexes to present a common front. Beyond economic reasoning, Italy, which exports a lot to the United States, continues to think that Trump is his ally. Article 18 of the regulation, which provides for the qualified majority, could slow down the process.Read too Von der leyen-kallas: the duo that weakens Europe against Trump
To uncover



The kangaroo of the day

Answer

Germany, whose automotive business could be significantly affected by American customs duties, might be tried by a conciliatory method, even when the subsequent Chancellor, Friedrich Merz, appears extra valiant that Olaf Scholz. France, as all the time, advocates a firmer line.

For Donald Trump, customs tariffs are a type of Swiss diplomacy knife. “The price is one of my favorite words in the dictionary … God, love, family, wife are all my favorite words, but the price is about fourth or fifth row of the list,” he stated to say, final February, receiving British Prime Minister Keir Starmer. Almost a faith!