American customs duties on car import from Germany and another EU countries are to be reduced to 15% retroactively from 1 August. EU Trade Commissioner Maroš Šefčovič (59) announced in Brussels that the EU would meet the essential conditions. "I think this is good news for the automotive industry," he said. Recently, the customs work on cars imported from the EU to USA was 27.5%.
Shortly earlier, the EU and the United States published a joint declaration based on trade agreements concluded in Scotland by the president of the European Commission Ursula von der Leyen (66) and the president of the United States Donald Trump. It states that the United States will reduce customs duties on retro-reversible cars from the beginning of this month, as shortly as the EU starts the legislative process on import concessions for certain US products. For example, customs duties on American industrial goods will be completely abolished and barriers to imports of certain foodstuffs will be removed.
Following the gathering of Trump with von der Leyen on 27 July, EU car manufacturers were in vain waiting for the expected tariff reductions, as their vehicles were initially not subject to the fresh 15% basic duty. However, according to the statement, this situation is about to change.
The declaration is not legally binding
The EU has committed itself to purchasing $750 billion worth of American energy from Trump by the end of its term. According to erstwhile statements by the president of the European Commission von der Leyen, liquefied natural gas (LNG), crude oil and atomic fuel from the United States will fill the gaps that will arise after the planned complete withdrawal from Russian gas and oil. Moreover, the EU has promised Trump to invest an additional $600 billion in the US in the coming years.
The joint declaration is not legally binding. The EU is afraid that Trump will rise its duties unilaterally again if the agreements are not implemented. The United States has not responded to the EU's proposal to abolish duties entirely on industrial goods.
The EU has accepted the agreement because, without it, from 1 August, US tariffs of 30% and full-scale trade war would be threatened. associate States wanted to prevent this escalation as it would pose an additional threat to trade and jobs, at least in the short term. "I want to make it clear that the alternative, i.e. trade war with highly advanced duties and political escalation, does not service anyone," said Šefčovic during the presentation of the declaration on Thursday. This conflict would harm companies on both sides of the Atlantic.
There have besides been concerns that Trump could make fresh threats in the event of an escalation of the conflict – for example one more time questioning NATO's commitment to military aid or limiting support for Ukraine. Both are highly sensitive, given the threats from Russia.
The situation of export car manufacturers remains difficult
If Europeans were not so dependent on the United States in the defence sector, they might not accept this agreement. From an economical point of view, the European Union, with around 450 million citizens in 27 countries, is simply a real marketplace force that could seriously harm the United States in the event of a trade conflict. For the European car industry, the political declaration has somewhat improved the situation, but it is inactive difficult. Duty-free position for imports from the USA to the EU means that in the future more competition from US producers will should be expected. Moreover, the fresh 15% work is inactive high. Before Trump took office, the work rate was 2.5%.
Further agreements
EU duties on American goods: The EU will abolish customs duties on all industrial goods from the United States and will grant preferential marketplace access to a wide scope of American seafood and agricultural products, including nuts, milk products, fresh and processed fruit and vegetables, processed foods, seeds, soya oil and pig meat and buffalo.
US basic customs tariff for EU goods: Almost all EU goods imported to the US are subject to a basic 15% duty. The 15% rate is not added to the existing work rates. It is fixed as a maximum rate, but in a fewer cases where the applicable work rates are higher.
Pharmaceutical products and semiconductors: Pharmaceutical products, microprocessors and wood from the EU will be subject to 15% duties. However, this will only happen after the United States has completed its investigations under section 232 and the establishment of fresh global duties for both sectors. For the EU, the maximum rate will be 15%. These products are presently subject to tiny duties or are not covered at all.
Other sectors: As of 1 September, the United States will only apply the highest preference tariff (MFN) to the following EU products: inaccessible natural resources (including cork), all aircraft and parts thereof, generic medicines and their components and chemical precursors.
Metal: The joint message does not set customs work rates for exports of metals from the EU to the USA. It simply states that both parties "want to research the anticipation of cooperation to defend their home markets from overcapacity while ensuring safe supply chains between them, including through tariff quota arrangements". EU and US representatives have previously stated that European steel and aluminium duties will stay at 50% and the same rate of work will besides apply to copper from 1 August.
Wine and spirit drinks: The joint written declaration does not explicitly mention the wine and spirits sector. However, it notes that both parties "agree to consider including another sectors and products applicable to their economies and value chains in the list of products to which only MFN duties would apply".
Strategic procurement: The joint declaration assumes that by 2028 the European Union will undertake to acquisition US liquefied natural gas, oil and atomic energy products with an estimated value of $750 billion.
Defence expenditure: EU associate States will acquisition American military equipment. The contract does not specify the acquisition price.
Other: The EU will work with the United States to simplify wellness certification requirements for American pigmeat and dairy products.
Digital services: The joint message states that the United States and the European Union are committed to eliminating unjustified barriers to digital trade and that the EU confirms that it will not introduce or keep network charges. The message besides states that the United States and the EU will not impose duties on ‘electronic transmissions’.
