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US President Donald Trump suspended for 90 days the duties of 20% he'd imposed on goods from Europe on 2 April, although a 10% rate is in place, as it is for most of the rest of the world. The previously imposed duties of 25% on cars, steel and aluminium also remain in place.
EU finance ministers will now actively seek solutions on how to use this time to reach a trade agreement with Washington and how to coordinate their efforts to deal with high duties if agreements cannot be reached.
The European Central Bank and the European Commission estimate that the impact of the US rates on the EU economy will be between 0.5% and 1.0% of GDP. With the EU economy as a whole expected to grow 0.9% this year, according to the ECB, US rates could lead the EU into recession.
The EU single market of 450 million consumers is one of the biggest assets of the block, but to make it truly efficient, the EU must reduce domestic regulatory restrictions that effectively act as rates.
The International Monetary Fund estimates that intra-EU trade barriers are equivalent to a 44% rate on goods and a 110% rate on services. EU ministers are likely to focus on lowering these barriers to the EU trade as a key response to the US rates.
Source: reuters.com