With the August 1 deadline approaching, US-EU trade negotiations are in jeopardy. In the absence of an agreement, the EU is preparing for potential tariffs on its goods that could lead to negative economic impacts on both sides.
Preparation for a No-Deal Scenario
With the August 1 deadline nearing, officials in Brussels are preparing for a situation where no agreement is reached. If the sides fail to reach consensus, EU goods entering the US could face tariffs up to 30%. This is down from the 50% threatened previously by Donald Trump, but it remains a significant number.
Negative Consequences for Both Sides
Negotiations have been dragging, and both parties are stuck in limbo. The 30% tariff would kick in automatically if there is no agreement, which would heavily impact industries on both sides of the Atlantic. Chief Economist Holger Schmieding from Berenberg referred to a 15% rate as a "positive outcome" compared to Trump's prior threats, but this depends on reaching any deal.
Europe Considers Retaliatory Measures
Should the US proceed with tariffs, Brussels is formulating its own countermeasures, including retaliatory tariffs. This plan could see tariffs imposed on American goods worth about €93 billion, approximately $109.4 billion. Moreover, the EU is considering activating the Anti-Coercion Instrument, which may restrict US suppliers' access to the EU market.
US-EU negotiations continue to provoke concern as the impending August 1 deadline could lead to substantial economic repercussions. Both regions are faced with uncertainty that may require swift action if an agreement is not reached.
