EU Minister Opposes 10% US Tariff on European Exports

French Industry Minister Marc Ferracci has expressed strong disapproval of a potential agreement that would impose a 10% tariff on European exports to the United States. Ferracci's stance signals a significant point of contention within the European Union, as negotiations between the EU and the US continue to evolve. The current tariff landscape is complex, with the US imposing varying rates on different EU exports, including 50% on steel and aluminium, 25% on cars, and 10% on all EU imports. The European Commission has proposed a "zero-for-zero" tariff deal on industrial goods, aiming to eliminate tariffs on all industrial goods as part of the ongoing trade negotiations. However, the EU is also seeking assurances from the US to lower tariffs in key industries such as pharmaceuticals, alcohol, semiconductors, and commercial aircraft. Additionally, the EU is pushing for quotas and exemptions to mitigate the impact of existing tariffs, particularly in the automotive, steel, and aluminium sectors.

The EU's position is further complicated by internal divisions among member states. While Germany and Italy appear to support the compromise, France and Ireland remain skeptical. French President Emmanuel Macron has emphasized the need for equivalent compensation if the US maintains 10% tariffs, stating that any agreement must be reciprocal. The EU has approved retaliatory tariffs on $21 billion worth of US goods, though implementation has been delayed. The European Commission is preparing a broader $95 billion tariff package and is set to meet with US officials to discuss a proposed agreement that covers not only goods trade but also non-tariff issues such as digital regulation, food safety, and product standards.

The Irish government, in particular, is concerned about the potential impact of a 10% baseline tariff on key sectors of its economy, including pharmaceuticals and semiconductors. The Irish government is actively engaging with its European counterparts to secure exclusions from the baseline tariff and clarity on the outcome of US national security investigations. The 90-day pause on increased tariffs, implemented by President Trump, is set to expire, and the US administration has indicated that it does not expect to extend this deadline. This development underscores the urgency for impacted businesses to stay informed about potential changes in US trade policies and their implications for supply chains and imports.

Ferracci emphasized the importance of unity and firmness in negotiations with the US, stating that a 10% tariff would be detrimental to industries with deeply integrated value chains, such as aeronautics. He called for a return to the previous tariff-free situation through negotiations, highlighting the need to consider the actual impact of tariffs on value chains. The EU's push for lower tariffs in key sectors and quotas/exemptions in the automotive, steel, and aluminium sectors reflects its strategic approach to mitigating the impact of US tariffs. The complex negotiations and internal divisions within the EU underscore the challenges in reaching a mutually beneficial trade agreement with the US.