TARIFFS: Trump Calls For 50% Tariff On EU Starting 1 June
May-23 12:00
US President Donald Trump's Truth Social post threatening 50% tariffs on EU products (see 'CROSS ASSET: Risk-Off Extends As Trump Recommends 50% Tariff On EU', 12:51BST) marks a major escalation in trade tensions between the White House and Brussels, with the initial 'reciprocal' tariff rate announced by Trump on 2 April set at 20%.
- MNI's Policy team highlighted the downbeat atmosphere in Brussels with regard to the US accepting the latest trade proposal from the EU (see 'MNI: EU States Doubt US Will Accept Trade Offer-Officials"). However, such a significant increase in the rhetoric and the rate of tariffs will come as a major shock to the EU.
- FT reported earlier that EU Trade Commissioner Maros Sefcovic and USTR Jamieson Greer were due to talk later today. It remains to be seen whether Trump's bombshell post results in the cancellation of the call, or efforts by the EU to accelerate talks as fast as possible.
- The FT report states "Donald Trump’s trade negotiators are pushing the EU to make unilateral tariff reductions on US goods, saying without concessions the bloc will not progress in talks to avoid additional 20 per cent “reciprocal” duties." FT adds that even if only the 10% baseline tariff remains in place, some EU trade ministers say it would still result in retaliatory tariffs on the US. As such, the imposition of 50% tariffs would almost certainly spark a much greater EU response.
- It should be noted that Trump's 'shock and awe' approach to tariff rates, as seen with China, could eventually result in expedited talks that lead to some form of a deal, as was seen earlier in the month following US-China talks in Geneva.
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