Top EU and U.S. trade officials clashed in high-stakes negotiations this week to avert tariff wars threatening global economic stability. European Commissioner Maroš Šefčovič emphasized reciprocity as the cornerstone of fair trade during marathon talks with Trump administration representatives, including Commerce Secretary Howard Lutnick.
The Biden administration inherited simmering tensions from Trump's 25% steel/aluminum tariffs and new proposals targeting:
- Automobiles
- Semiconductors
- Pharmaceuticals
Central to the dispute is the EU's value-added tax (VAT), criticized by U.S. officials as unequal to domestic sales taxes. Šefčovič argued “VAT applies equally to all consumers” during heated discussions, though no resolution emerged. Analysts warn combining these levies with Trump's proposed sectoral tariffs could spike import taxes by 40-60%.
“We must avoid the pain of measures and countermeasures,” Šefčovič stressed, revealing talks focused on creating “positive momentum” through early joint actions.
The EU commissioner highlighted China's steel overcapacity as a shared challenge requiring transatlantic cooperation. With inflation concerns looming over 2024 elections, officials acknowledge tariff wars risk:
- Consumer price surges
- Manufacturing slowdowns
- Political fallout for incumbent leaders
Despite lingering VAT disagreements, both sides agreed to continue technical discussions. Šefčovič emphasized relationship-building, stating “I’m glad we could have such an intense meeting” while pushing for actionable next steps within weeks.
