EU contemplates proposing a 50 billion euro fund to Washington in an attempt to settle the ongoing disagreement
Loosening EU-US Trade Tensions: A Closer Look
It's all happening behind the scenes as the European Union (EU) and the United States (US) work tirelessly to resolve their trade disputes. The McFlurry of negotiations lies squarely on the USA's Liquefied Natural Gas (LNG) and soybeans, and here's a lowdown on the current state of play.
Talks in Progress
The EU is dusting off a plan to present next week, their ace in the hole aimed to reduce trade barriers, ramp up investments in the US, and address perceived challenges like Chinese steel excess[1]. Their strategy includes purchasing American wares like LNG and tech.
The US, on the other hand, has slapped a 10% general tariff (on hold until July 9th) and a 20% tariff on specific territories, causing a stir in the EU and prompting a countermeasure of €18 billion in retaliatory tariffs (currently paused too)[5]. With diplomats expressing doubt about US priorities, these negotiations are proving tricky, with Washington yet to provide clear direction[2].
Possible Scenarios
- LNG and Soybean Boost: The EU’s future package may involve LNG procurement[1], aligning nicely with US energy export goals. Soybeans, though not explicitly promised, could find their way into the mix with broader agricultural agreements[1].
- Limited Tariff Relief: A temporary truce might see mutual tariff pauses or exemptions for specific sectors, but the EU has decided to hold their retaliatory measures until July[5].
- Regulatory Harmony: The proposed EU-US deal might include regulatory alignment in vital sectors like energy or defense[2], cutting down on non-tariff trade obstacles.
- Lengthy Uncertainty: With France pushing for a "true free-trade agreement" as a long-term goal[3], deeper integration seems daunting without clear US demands and European political shifts.
Stumbling Blocks
- Asymmetric Desires: The US is pinning high hopes on broad concessions but has failed to specify targets, leaving the EU hesitant to lay down offers prematurely[2].
- Retaliatory Threat: failings in the negotiations could see a return of US tariffs on EU goods (up to 20%) and EU countermeasures worth €26 billion[5].
In a nutshell, a rise in US LNG exports appears likely, but soybean gains hinge on broader agricultural concessions. The July 9th deadline and ongoing diplomatic unpredictability make a comprehensive deal a rarity, favoring incremental advancements over grand gestures.
- The European Union is planning to reduce trade barriers and increase investments in the US, which may include purchasing American Liquefied Natural Gas (LNG) and tech.
- The US has imposed a 10% general tariff and a 20% tariff on specific territories, causing a stir in the EU, and the EU has warned of €18 billion in retaliatory tariffs, currently paused.
- In the negotiations, the EU is hesitant due to the US's lack of specific targets for concessions, making the trade talks challenging.
- If a truce is reached, it may involve mutual tariff pauses or exemptions for specific sectors, but the EU has decided to hold their retaliatory measures until July.
- With diplomatic unpredictability and political shifts, a comprehensive deal between the EU and US may be elusive, and incremental advancements over grand gestures may be more likely.
