In Paris, discussions between Europe and the United States indicated progress in resolving a significant tariff dispute, albeit no definitive solutions were reached. The discussions occurred alongside a meeting of the Organization for Economic Cooperation and Development, highlighting the economic partnership between these global powerhouses.
Maroš Šef?ovi?, the European Union’s chief trade negotiator, engaged in talks with Jamieson Greer, the U.S. Trade Representative. Both parties expressed optimism as Greer remarked on the EU’s willingness to collaborate towards reciprocal trade benefits. He anticipated further constructive dialogues in the coming periods, indicating a direction toward meaningful progress.
Šef?ovi? echoed these sentiments, acknowledging the positive pace of negotiations. He also outlined plans for continued technical meetings in Washington, supplemented by a forthcoming video conference with Greer, aimed at evaluating and planning the future of these discussions.
Despite these developments, a comprehensive trade agreement is unlikely to materialize swiftly due to the complexity of issues at hand. President Donald Trump has consistently expressed dissatisfaction over the trade deficit with the EU, which reached a record $161 billion last year. He attributes this disparity to unfair trade practices, highlighting the EU’s 10% tariff on imported cars, compared to the U.S.’s adjusted 25% tariff.
The situation intensified following unexpected U.S. tariffs on steel, which disrupted global markets and complicated the broader tariff negotiations. In response, the EU has prepared potential “countermeasures” against the U.S. in retaliation.
Currently, the EU has proposed a “zero for zero” deal to eliminate tariffs on industrial goods, including automobiles. Although Trump initially dismissed this proposal, the EU maintains it as a viable option. Additionally, they may consider increased purchases of U.S. liquefied natural gas and defense items, alongside reducing car duties, but remain firm against abolishing the value-added tax or opening its market to American beef.
French Trade Minister Laurent Saint-Martin emphasized that negotiations could still yield results, warning that failure might prompt Europe to enact countermeasures on American goods and services.
Greta Peisch, formerly general counsel for the U.S. trade representative, suggested that the zero-for-zero proposal could facilitate progress, should the Trump administration seek a path to circumvent additional tariffs on the EU. However, Peisch remains skeptical about the U.S.’s commitment to reaching an agreement, given Trump’s enduring grievances over EU trade practices.
Key among these grievances is the EU’s value-added tax system, seen by Trump as unfairly protective since it impacts U.S. exports. Despite this perception, VATs are applied equally to domestic and international products, posing a minimal chance of policy overhaul to meet U.S. demands.
Further complicating matters, the EU remains staunch in its food and safety regulations, often criticized by Washington as trade barriers. These include prohibitions on hormone-treated beef and genetically modified foods. Such regulations, encompassing long-standing points of contention, reflect differing national regulatory choices impacting trade policies between the two economies.