Because the Fee struggles to seek out new shops for its exports, the query of whether or not this will probably be sufficient within the face of the tariffs Donald Trump is threatening to impose stays open.
In Davos, on Tuesday, the President of the European Fee, Ursula von der Leyen introduced that the EU would shortly be relaunching its strategic partnership with India, and the chief has confirmed that all the School of Commissioners will go to the nation within the spring.
Within the area of only a few days, the European Fee has introduced an replace of its commerce settlement with Mexico, the relaunch of the negotiations with Malaysia and forthcoming commerce talks with India.
All this on prime of an settlement reached earlier than Christmas with the Mercosur international locations – Brazil, Argentina, Uruguay, and Paraguay – and one other one with Switzerland.
With Donald Trump threatening European imports with 20% tariffs, the EU is urgently diversifying its export markets.
The Mercosur settlement is the largest commerce deal ever signed by the EU. It should create a market of almost 800 million residents and can slash tariffs, saving EU firms €4 billion yearly. The Switzerland complete bilateral commerce settlement is price €550 billion.
The commerce settlement with Mexico, a rustic that Donald Trump is straight threatening with customs duties, get rid of tariffs of as much as 100% on key EU exports akin to cheese, poultry, pork, pasta, apples, jams and marmalades, in addition to chocolate and wine. It additionally extends the safety of geographical origin labels for European merchandise.
EU-Mexico commerce in items reached €82 billion in 2023, whereas two-way commerce in providers reached €22 billion in 2022.
As deliberate by the Mercosur free commerce settlement reached in December, the Mexico settlement additionally opens public procurements to European firms.
“The EU as a bloc is an export-orientated financial system. It due to this fact advantages from decreasing tariff boundaries with international companions by way of free commerce agreements,” Arthur Leichthammer, from the Delors Institute in Berlin mentioned, including that “it’s typically mentioned that free commerce agreements profit German trade, notably the automotive sector, however as a result of deeply built-in European worth chains, the financial advantages are way more dispersed.”
However will these offers offset the consequences of potential US tariffs? In 2023, the US was the most important companion for EU exports of products, with the latter benefiting from a commerce surplus of $131.3 billion in 2022. Excessive US tariffs danger slicing the EU off from this manna.
“We have now to seek out an association with the US as a result of we won’t within the quick time period actually compensate our commerce with the US with different international locations,” MEP Bernd Lange (Germany/S&D), chair of the European Parliament’s commerce committee, informed Euronews’ Radio Schuman Podcast, including: “In the meanwhile, round about 20% of our exports go to the US.”
Friedrich Merz, the Christian Democrat candidate for German Chancellor, favours negotiating a US commerce settlement, however France stays sceptical.
“The People need the Europeans to take extra duty, notably within the space of defence and safety. The Trump administration’s huge demand is to cease paying for Europeans’ safety,” one senior EU official mentioned, including that it may be completed however “on financial phrases which are beneficial to Europeans.” In line with this official, the Europeans ought to inform the US: “We’re coping with the border with Russia, the reconstruction of Ukraine and our safety, however we can not do this with a commerce struggle from the USA.”
A silver lining for the EU – if not for the storm clouds of local weather change – could also be that Joe Biden’s flagship US Inflation Discount Act tax incentive programme for inexperienced industries might be scrapped by Trump. The brand new US president has ordered US federal companies to “instantly pause” the spending of cash from the Inflation Discount Act. The specter of European industries relocating to US soil to make the most of the IRA would possibly then recede.
