DONALD Trump has reignited the trade war between the US and the EU by threatening to slap crippling 50-percent tariffs on goods imported from the bloc.
Britain struck a trade deal with the US earlier this month and escapes the lethal new measures – but Trump’s hated EU has not been so lucky.
ReutersTrump has threatened to tariffs of 50 percent on goods from EU countries[/caption]
AFPThe European Commission, led by President Ursula von der Leyen, is yet to comment[/caption]
Unleashing the threat on Truth Social, Trump fumed: “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with.”
He said that EU red tape has resulted in “a Trade Deficit with the US of more than $250,000,000 [$250million] a year, a number which is totally unacceptable.
“Our discussions with them are going nowhere!
“Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025,” he wrote.
The European Commission did not immediately comment on the new threat, insisting it would wait for a phone call between EU trade chief Maros Sefcovic and his US counterpart Jamieson Greer scheduled for later on Friday.
In a separate post, Trump warned tech giant Apple that he might impose a 25-percent tariff on on any iPhones manufactured outside the US.
The vast majority of iPhones are assembled in China.
The twin threats spun global markets into turmoil after weeks of relative calm when the tariff chaos seemed to have cooled off.
US markets S&P 500 and Nasdaq were down 0.9% and 1.5% respectively, and European shares fell by 1.1%.
Tariffs of 10 percent currently apply to goods from the EU – the world’s largest trading bloc – but has steamrolled in with new threats after being frustrated by the lack of progress in trade talks.
This is a feeling which has been simmering for some time.
In an Oval Office meeting with Nato secretary-general Mark Rutte in March, Trump said: “We sell no cars to Europe, I mean, virtually no cars, and they sell millions of car to us.
“They don’t take our agriculture. We take their agriculture — it’s like a one way street with them.
“The European Union is very, very nasty.”
He went on to complain that the EU sues American companies, citing cases against west coast tech giants Apple, Google and Facebook.
GettyTrump has made his resentment of the EU abundantly clear[/caption]
AFPPrime Minister Keir Starmer negotiated a trade deal with the US earlier this month, and Britain is unaffected by the latest threat[/caption]
US Treasury Secretary Scott Bessen said on Friday that Trump does not believe the EU’s trade offers to the US are good enough, and that he hopes the threat of 50 percent tariffs will “light a fire under the EU”.
Representatives from the 27 EU countries are due to meet to discuss trade in Brussels later in the day.
Trump’s stop-and-start global trade war, which kicked off on his much trumpeted “Liberation Day”, has rattled markets over the past few weeks.
On April 2 he announced a barrage of sky-high tariffs for countries around the world – with a baseline 10 percent applied to every nation.
Shortly afterwards, the White House paused the most of the tariffs – except for those against China – leaving in place the 10 percent base rate.
China and the US locked horns in an escalating trade war, before Trump called time and dramatically slashed the tax to 30 percent.
Lindsay James, an investment strategist at Quilter, said: “What is somewhat of a surprise is the fact that the EU will now face a considerably higher tariff rate than China, an almost unthinkable scenario just a matter of weeks ago.
“It is highlighting that much of this policy is designed to be punitive, rather than having any economic credibility to it.”
What are tariffs?
A TARIFF is a type of tax.
It refers to the tax governments impose on goods coming in that have been imported from other countries.
They are usually measured as a percentage of the value of the item.
So, if a company imported a TV worth £100 to the UK from China, and the UK had a 10% tariff on Chinese imports, then the company would have to pay £10 in tax to the government – pushing the consumer price up to £110.
They were traditionally used as a way for governments to raise money.
Whilst they do still provide an income source, these days they are more commonly used to protect industries within a country from foreign competition.
For example, if the UK government wants to protect the British car industry, it can increase tariffs on foreign-made cars sold in the UK so that British-made cars are cheaper.
Britain became the first country in the world carve out a trade deal with the US after Trump’s tariff blitz.
The US President hailed the agreement as “historic”, and claimed it was possible only because of Brexit.
There was welcome relief for British carmakers who no longer pay 25 per cent tariffs, and steelmakers who have been spared duties.
But most UK goods heading to the US still face ten per cent tariffs — meaning we remain worse off than before the President began his onslaught.