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Thursday, Apr 03, 2025

EU Faces Pressure to Limit Retaliatory Tariffs Against US Duties

Member states express concerns over proposed tariffs targeting various agricultural and beverage products.
The European Union is confronting significant pressure from member states, particularly France and Ireland, as well as powerful agricultural unions, to exclude numerous food and beverage items from a proposed list of retaliatory tariffs against U.S. tariffs.

The European Commission has received a torrent of objections from businesses and member countries regarding this list, highlighting the challenges of achieving a united stance among the 27-member bloc in response to U.S. pressures.

Irish Public Expenditure Minister Pascal Donohoe warned on Friday about the potential for "retaliatory and reciprocal measures that could escalate trade disputes," while Italian Prime Minister Giorgia Meloni stated that the EU should negotiate on the high tariffs imposed on certain goods.

She noted, "There are significant differences regarding the selected products; this is what we need to work on to find a good and shared solution."

Italian Agriculture Minister Francesco Lollobrigida called for discussions, expressing concerns that additional burdens might create more challenging conditions for certain exports, though he added, "We are not alarmed."

France, Italy, and Ireland have expressed apprehension after the European Commission proposed a 50% tariff on select products in response to U.S. tariffs of 25% on steel and aluminum.

In a robust response, former U.S. President Donald Trump threatened to impose tariffs as high as 200% on European beverages.

In response, Paris requested Brussels to postpone the implementation of the measures from April 1 until mid-April to allow for negotiations.

Nevertheless, EU officials have indicated that efforts to negotiate have made little progress.

Rather than acquiescing to these demands, Trump escalated measures this week by imposing a 25% tariff on automobiles, asserting that April 2 would be a "freedom day," during which comprehensive tariffs on all goods would be introduced, alongside existing customs duties.

The EU's chief negotiator projected that the bloc might have to pay at least 20% under the current circumstances.

The tariff package concerning U.S. imports valued at €26 billion is slated for approval by EU member states, with implementation set for April 12. Accompanying its proposals, the European Commission published a 99-page list detailing potential targets for tariffs, from soybeans to cosmetic products and underwear, allowing companies and governments an opportunity to object before the finalization of the list.

Irish Trade Minister Peter Burke articulated in parliament this week that the government has communicated its concerns to the EU, particularly regarding the dairy and beverage sectors.

He noted that the EU is "open to adjusting rebalancing measures to achieve the right balance among products, taking into account the interests of European producers, exporters, and consumers."

The European timber industry has also requested the removal of timber from the tariff list due to fears of retaliatory actions, as representatives highlighted that the EU exports three times more timber than it imports.

Meanwhile, Copa-Cogeca, representing European farmers, is advocating for the exclusion of soybeans from the tariff list, citing its essential role in animal feed.

A representative stated, "The agricultural food sector should be kept out of retaliatory measures or any disputes not pertaining to it."

Furthermore, the agricultural sector in several EU countries is facing a shortage of raw materials used in animal feed production.

Consequently, imposing additional tariffs on key products like corn, soybeans, and dried distillers grains with solubles could disrupt production, create market instability, and raise prices for consumers.

Diplomats indicate that the European Commission holds significant sway over such trade proposals, requiring a qualified majority of member states to hinder the plan during voting.

An EU diplomat remarked, "It is not surprising that governments act in defense of their interests, but I am confident that the Commission will present a robust package that will be approved; if we block these measures, we will be in a predicament, and member states are well aware of that reality."
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