In a trade dispute with the European Union, US president Donald Trump advocated for punitive tariffs of 50 percent. He wrote on his online platform, Truth Social, that this levy for goods from the EU should come into effect on June 1.
“There are no tariffs if the product is built or manufactured in the US,” he added. Trump wrote that ongoing negotiations were leading nowhere.
Trump complained that the European Union was primarily founded to take advantage of the US in the area of trade. He criticised “powerful trade barriers, value-added taxes, ridiculous company penalties, non-monetary trade barriers, currency manipulation, unfair and unjustified lawsuits against US companies and much more”.
The reaction on the financial market was sharp. European stock markets temporarily fell by around 3 percent. The euro came under pressure, and safe investments such as German government bonds were in demand. Losses were also emerging on the stock exchanges in the US at the start of trading.
EU-US negotiations said to be leading nowhere
In April, after major turbulence on the stock and financial markets, Trump surprisingly decided to grant many countries – including the EU – a 90-day break from certain tariffs. This concerned punitive duties that were based on the trade deficit of the respective countries. The then US president initially put part of his huge tariff package, which he had announced at the beginning of April, on hold. The EU had also announced that it would suspend planned retaliatory tariffs on US products for 90 days.
Trump had threatened the EU with blanket tariffs of 25 percent should there be no separate agreement with the US. The deadline had previously been the month of July. The Trump administration had not yet responded to an offer from Brussels for the mutual abolition of all tariffs on industrial goods. However, Trump had actually been optimistic in the past that a solution could be found with the Europeans in the tariff dispute.
It is now completely unclear whether the punitive tariffs of 50 percent will actually come into force from June. Trump had regularly threatened high tariffs in the past – and then made a U-turn. The US president wanted to correct alleged trade imbalances with the tariffs and relocate production to the US. At the same time, the tariff revenue was intended to help at least partially refinance his expensive election promise of major tax cuts.
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