Foodstuff labeling laws across European Union nations have yet to be standardized by the Commission, with no approved proposal for a directive on this matter.
In a significant development, US President Donald Trump and European Commission President Ursula von der Leyen have agreed on a trade deal that imposes a 15% tariff on most European Union (EU) exports to the United States (US), while US exports to the EU remain duty-free in most sectors. This agreement, reached in Scotland, marks a phase in the ongoing trade dispute and is intended to avoid further escalation of tariffs from both sides.
Key points on the current status and prospects of the trade dispute include:
Tariff Details
The US will apply a 15% tariff on most EU goods, including cars, semiconductors, and pharmaceuticals. Some sectors, such as aircraft, certain chemicals, generic medicines, agricultural products excluding sensitive ones, and critical raw materials, are exempt from tariffs or subject to zero tariffs. The existing US tariff of 50% on European steel and aluminum remains, but a quota system for these metals is proposed by the EU, though technical details are still unclear.
Uncertainties
There is no legally binding text of the agreement yet, and details on specific sectors, tariff application, and the functioning of quotas remain uncertain. Conflicting statements from the EU Commission and the White House about the scope of quotas and commitments for agricultural and digital trade barriers contribute to these uncertainties.
Concessions and Commitments
Besides tariffs, the EU has committed to purchasing $750 billion of US energy, investing $600 billion in the US, and buying US military equipment, though specifics are not fully clarified. The deal aims to stabilize trade, encourage local sourcing, and address longstanding imbalances, but the full economic impact remains to be seen.
Market Reactions and Implications
The deal has provided some clarity and reduced immediate trade war risks, positively affecting European equity markets, particularly in aerospace which is tariff-exempt. However, market participants seek more details to assess long-term effects on growth and inflation on both sides of the Atlantic.
In summary, the trade dispute is currently de-escalated with a compromise tariff regime, but the absence of a comprehensive, legally binding agreement and unresolved details means tensions and uncertainties remain. The prospects depend heavily on forthcoming clarifications and implementation of the deal's terms.
- The ongoing business policy-and-legislation between the US and EU, as exemplified by the new trade deal, significantly impacts finance, with a 15% tariff applied to most EU exports to the US while US exports remain duty-free in most sectors.
- In the general news, the EU has pledged to commit $750 billion to US energy, invest $600 billion, and buy US military equipment, but the details of these concessions and commitments are yet to be fully clarified.
- Political implications of the trade deal are vague, as the absence of a comprehensive, legally binding agreement and unresolved details means that tensions and uncertainties persist, with the prospects depending heavily on forthcoming clarifications and implementation of the deal's terms.
