The EU is ready to deploy its strongest commerce measures and will impose levies on US digital firms if negotiations with Donald Trump fail to finish his tariff warfare towards Europe.
European Fee president Ursula von der Leyen instructed the Monetary Instances that the EU would search a “completely balanced” settlement with Washington throughout Trump’s 90-day pause in making use of further tariffs.
However the Fee president warned she was able to dramatically broaden the transatlantic commerce warfare to providers if these talks failed, doubtlessly together with a tax on digital promoting revenues that might hit tech teams comparable to Meta, Google and Fb.
“We are developing retaliatory measures,” von der Leyen stated, explaining these might embody the primary use of the bloc’s anti-coercion instrument with the ability to hit providers exports. “There’s a wide range of countermeasures . . . in case the negotiations are not satisfactory.”
She stated this might embody tariffs on the providers commerce between the US and the EU, stressing the precise measures would rely on the end result of talks with Washington. “An example is you could put a levy on the advertising revenues of digital services.”
The measure could be a tariff utilized throughout the only market. This differs from digital gross sales taxes, that are imposed individually by member states.
Von der Leyen, head of the EU’s government, stated Trump’s commerce warfare had brought about “a complete inflection point in global trade”. “It’s a turning point with the United States without any question,” she stated, including: “We will never go back any more to the status quo.”
“There are no winners in this, only losers,” she continued, referring to turmoil in inventory and bond markets. “Today we see the cost of chaos . . . the costs of the uncertainty that we are experiencing today will be heavy.”
Citing the necessity to negotiate with Washington, the Fee on Thursday paused its deliberate retaliation towards US metal and aluminium tariffs, which have been imposed final month. The measures would have hit round €21bn of US imports, together with poultry, orange juice and yachts.
Von der Leyen, who oversees commerce coverage on behalf of the EU’s 27 member states, stated the Fee had beforehand tried to barter with the US however was instructed to attend till Trump’s April 2 announcement, which imposed a 20 per cent “reciprocal” tariff on the EU.
She has publicly supplied a zero-for-zero tariff deal on industrial items however has had little traction in Washington, the place officers complain about alleged EU non-tariff commerce boundaries comparable to VAT and product requirements.
Von der Leyen stated she was open to discussing aligning EU and US requirements however stated it was prone to produce restricted outcomes.
“I think it’s absolutely worth looking at where we can align our norms and standards to make business easier. So I’m open to that,” she stated. “But we should not raise expectations too much because . . . often there are different standards because there are differences in the way of life and in the culture.”
She dominated out revisiting the EU’s “untouchable” rules on digital content material and market energy, which Trump officers see as an efficient tax on US Massive Tech companies. Nor will the EU negotiate over VAT, which she stated was equal to US gross sales tax: “These are not in the packages of negotiation because these are our sovereign decisions.”
If negotiations fail, the EU would routinely reactivate the retaliatory measures deliberate in response to US tariffs on metal and aluminium.
As well as, von der Leyen stated additional countermeasures to Trump’s so-called reciprocal tariffs might goal the US’s enormous providers surplus with the EU. The US president solely counts items in his commerce figures, excluding US providers exported to the remainder of the world.
“Companies that offer services make a good business in this [EU] market. And the vast majority of the services, 80 per cent of the services are coming from the US. So again, we want a negotiated solution that is the best for us, all of us,” she stated.
In addition to doubtlessly concentrating on providers commerce, von der Leyen stated Brussels was additionally contemplating strikes comparable to a potential levy on scrap metallic exports to the US, the place EU provides are in excessive demand from US metal mills.
Turning to the potential knock-on impact of a world commerce warfare, von der Leyen stated the EU “will not tolerate” Chinese language items hit by US tariffs being redirected to Europe, including that Brussels would “take safeguards” if a brand new monitoring mechanism detected a rise in Chinese language imports.
Von der Leyen stated she had made this level to Chinese language Prime Minister Li Qiang in a name this week, and that he had replied that “this risk does not exist because they would stimulate the consumption in China”.
Whatever the final result of negotiations with the US, Trump’s insurance policies had radically reshaped world commerce relations, von der Leyen stated, and spurred talks between the EU and powers together with Malaysia, Thailand, Philippines, Indonesia and the United Arab Emirates.
“[There is] the interest of so many countries around the world to work closer with us, together, to balance the system and to have free trade really competing on quality and not around tariffs,” von der Leyen stated.
Each the US and EU agree that the World Commerce Group guidelines have failed to make sure a degree enjoying subject as China subsidises a few of its manufacturing output, flooding world markets.
The commerce warfare has now spurred discussions on “thinking how we can modernise, reform and stabilise the WTO”.
“But the emphasis must be on modernising and reform, it cannot be preserving what we have today because there are too many difficulties,” she stated. “I mean, never waste a good crisis.”
