17/06/2026 05:14 AST
The European Union is poised to implement the import duty cuts it agreed with US President Donald Trump last year, averting at least for now another eruption of tariff conflict between the world's largest trading partners. The European Parliament will vote on Tuesday on legislation to fulfill the EU's side of the trade deal struck nearly 11 months ago at Trump's Turnberry golf course in Scotland. A clear majority is expected to back the agreement that includes the removal of EU duties on US imports and broad US tariffs of 15 percent. Trump threatened "much higher" tariffs unless the EU acted soon.
Industry has urged the lawmakers to back the deal and European automakers, particularly hard hit by tariffs, are already making preparations on its basis. The Turnberry deal removes a 10 percent EU import duties on US cars.
Fifteen business associations representing EU carmakers, as well as textiles, cosmetics and food and drink producers, said backing the deal would ensure stability for businesses that rely on annual transatlantic trade of $2 trillion. But in a statement they said it was "not the end of the conversation".
The crucial next step will be whether Washington's new tariffs due to come into force from July 24 will exactly reflect the Turnberry accord. The two sides also need to agree to refrain from reimposing mutual tariffs on $11.5 billion of goods related to a decades-long dispute over aircraft subsidies. A five-year suspension of those tariffs is due to expire on July 11.
US Trade Representative Jamieson Greer said the United States will stick to the deal, but Bernd Lange, chair of the EU assembly's trade committee, expressed doubts. "The decision is in the White House by the president and therefore nobody knows what will really happen," he said.
Trump's warning of 100 percent tariffs on French wine on Monday could certainly unravel the Turnberry deal. Lange says the European Union should, if necessary, be ready to suspend parts of the deal. It could also activate its Trump tariff countermeasures on ?93 billion ($108 billion) of US goods, which are suspended until August 6.
Beyond tariffs, Washington and Brussels must work on other elements of the Turnberry deal and each side has very different priorities. The United States insists the EU address non-tariff barriers and regulatory matters, including US concerns over the EU's carbon border tax and its requirements on companies to prove commodity imports are not from deforested land or audit their supply chains for human rights or environmental harm. The EU has scaled back some of its regulation and extended deadlines to comply. But Exxon Mobil Corp wants the EU's corporate sustainability law scrapped and has taken its grievances to Trump. The European Union's complaints include US tariffs above 15 percent applied to products containing metal such as washing machines, wind turbines and motorcycles.
Trump even widened the range of products, known as metal derivatives, a month after the Turnberry deal. Some have since been removed from the list, but EU legislation calls for the European Commission to suspend tariff reductions on US steel or aluminum goods unless all the tariffs fall back to 15 percent by the end of the year. EU cutlery and catering equipment makers say the higher tariffs risk pricing them out of the US market or compressing already thin margins.
The European Union also wants the United States to replace 50 percent tariffs on steel and aluminum with tariff-free quotas and to increase the range of tariff-free products. EU wine and spirits makers are keen to be first in line. They have allies among U.S. spirits producers, which favor no tariffs for both sides, pointing to a 450 percent growth of bilateral trade from 1997 to 2018 when a zero-for-zero tariff regime was in place.
That regime ended with tariff conflict in Trump's first term and Chris Swonger, president of the Distilled Spirits Council of the United States, said the risk of another hung over the industry. Ongoing uncertainty over "Section 232" investigations that Trump can use to apply tariffs if products are judged to threaten US national security is also a risk and could mean the Turnberry deal terms are broken.
One threat that has receded is of Trump suddenly introducing new tariffs, such as those he said he would impose on European allies over Greenland in January. After the US Supreme Court's decision to strike down Trump's global tariffs, his administration now needs to carry out a formal investigation before imposing levies. "There might be other tools the United States finds to make threats for political reasons, but I don't think tariffs are going to be that instrument, because it is no longer available," said Ignacio Garcia Bercero, senior fellow at think tank Bruegel.
Reuters
Please wait...
