Finance ministers from Europe have concurred on the “necessity for a cohesive position” regarding US trade tariffs.
This announcement followed a gathering of both Eurozone and non-eurozone members in Warsaw.
Paschal Donohoe, Minister for Finance and President of the Eurogroup, remarked that they acknowledged the “necessity for a cohesive stance and strategy in light of the ongoing changes,” alluding to the economic volatility triggered by the tariffs from the Trump administration.
“We have a clear understanding of our position within Europe. We stand united in promoting a rules-based trading system among ourselves,” Mr. Donohoe stated during a press conference.
Valdis Dombrovskis, the European Commissioner for Economy, expressed that the European Union appreciated the pause, asserting that the United States’ action “provides room for negotiations.”
The White House confirmed that a 10% blanket duty on nearly all imports will continue to be enforced.
The sudden change in approach from the Trump administration on Wednesday evidently caught economists at the European Commission off guard, as Mr. Dombrovskis provided forecasts on the broader economic implications of Washington’s proposal for a 20% tariff on EU imports.
According to the commission, they projected that this move would lead to a 1.4% decrease in GDP (gross domestic product) in the US by 2027 and a 0.2% contraction in GDP across the EU during the same timeframe.
Mr. Dombrovskis further noted that the long-term effects of a permanent 20% tariff could result in a drop in US GDP of up to 3.6%, along with a potential decline of up to 0.6% in the EU, while global trade is expected to shrink by 7.7% over the next three years.
“The enforcement of tariffs will undermine the US economy by diminishing consumers’ purchasing power, real wages, and increasing the costs of critical intermediate goods for production, beyond the immediate consequences of the tariffs,” he explained.
“Europe did not instigate this conflict, nor does it desire such a confrontation. Tariffs contradict the political and economic rationale of the deep-seated and longstanding transatlantic trading relationship.”
Mr. Dombrovskis mentioned that the EU is prepared to negotiate a mutually beneficial agreement with the US.
Christine Lagarde, President of the European Central Bank, stated that the bank is monitoring developments and is “always prepared to utilize instruments” to maintain price and financial stability in the eurozone.
The EU has proposed zero-for-zero tariffs on industrial goods, and Commissioner for Trade Maroš Šefčovič is set to visit Washington this Sunday for discussions with US officials on Monday to seek a resolution to the tariff dispute.
In 2023, trade between the US and EU amounted to €1.6 trillion, establishing it as the largest trading partnership globally.
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US tariffs on Chinese imports also did not escape Mr. Trump’s actions, with the US President announcing plans to raise the levy to 125%.
In retaliation, China declared that it would increase its tariffs on US imports from 84% to 125%.
