The European Union is preparing for retaliatory tariffs from the United States as trade talks drag on indefinitely. Further, in 2023 so far, the EU has had a massive 48 billion euro trade surplus with the U.S. Parallel U.S. probes into drugs and chips imports are combining to create existential stress on the EU’s chief trade guardians. These investigations would result in additional tariffs.
On April 14, Maros Sefcovic, the EU’s chief trade negotiator, met with U.S. Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer to discuss ongoing trade relations. These talks have so far been unsuccessful at producing the necessary compromise, which puts both sides on a potentially explosive collision course.
The European Union has already netted a trade surplus with the United States. This success is largely due to its successful exports of medicinal & pharmaceutical goods, road vehicles, and machinery. This surplus consists of a goods surplus of 157 billion euros and a services deficit of 109 billion euros. The EU retaliated against the U.S. tariffs on steel and aluminum with countermeasures of over 20 billion euros. Now, these measures have been paused for the next three months.
Olof Gill, trade domicile spokesperson of the European Commission underlined the strong devotion of EU for the negotiations.
“As advocated from day one, we prefer negotiations to tariffs, which are damaging to our respective economies, business operators and consumers.” – Olof Gill, trade spokesperson for the European Commission
The EU’s new, more assertive, trade negotiating posture signals its intent to engage the U.S. in a more constructive and reciprocal debate. Gill stated, “The EU is doing its part. Now, it is necessary for the U.S. to define its position. As with every negotiation, this must be a two-way street.”
In spite of the EU’s efforts, U.S. President Donald Trump has vocally objected to European trade practices. He previously remarked that “the European Union has taken terrible advantage” of trade agreements, highlighting issues such as a perceived lack of openness to American food products and vehicles.
Recent high-profile investigations of the pharmaceutical and semiconductor industries have injected significant new energy into that urgency. On Monday this week, Gill underscored the fact that the EU is ready to act further if negotiations fail to go in a positive direction.
“The Commission also continues with our preparatory work on additional countermeasures, should the negotiations fail to result in a successful outcome. And everything remains on the table.” – Olof Gill, trade spokesperson for the European Commission
The EU’s aggressive trade policies play a clear and significant role in the size of its surplus with the U.S. Analysts say that Italy’s Prime Minister Georgia Meloni missed the opportunity to deepen her diplomatic ties with Trump. This opportunity comes at a time of significant positive momentum.
“This represents a key opportunity for her to demonstrate both her closeness to President Donald Trump and her potential role as a credible interlocutor capable of revitalizing transatlantic dialogue,” – Wolfango Piccoli, co-president of consultancy firm Teneo
In 2024 Italy reached an all-time high trade surplus of 40 billion euros with the U.S. Going forward, Meloni will need to balance her country’s export industries’ interests with stroking her weakly-crafted and complex international relations.
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