The European Union has decided to suspend its countermeasures against the unwarranted trade tariffs imposed by the United States to allow time and space for negotiation between the EU and the U.S., announced the European Commission, the body responsible for managing trade policy within the union.
To implement this, the institution adopted two legal acts today to impose and suspend its countermeasures, one week after announcing this suspension, which followed a temporary pause by the United States on imposing reciprocal tariffs of 20% on the EU. These acts will remain in effect until July 14 of this year.
The suspended EU response affects 21 billion euros worth of U.S. exports. In addition to these, preparatory work is ongoing for other potential EU countermeasures that might be adopted in the future.
Brussels considers the new U.S. tariffs to be unjustified and harmful, posing a risk of causing economic damage to both parties and to the global economy.
The EU shows a preference to engage in dialogue with its transatlantic partner; hence, the European Commissioner for Trade, Maros Sefcovic, is currently in Washington for meetings with U.S. counterparts to explore possibilities for a negotiated settlement.
The decision comes amid heightened trade tensions following Donald Trump’s announcements of imposing 25% tariffs on European steel, aluminum, and cars, and 20% reciprocal tariffs on the EU, the latter currently suspended for 90 days.
This suspension has calmed markets, which had experienced severe losses, and was welcomed and supported by the EU, which also suspended its 25% tariffs on American products during the same period in response to U.S. tariffs on European steel and aluminum.
The European Commission has exercised caution in its response, a strategy endorsed by countries such as Portugal.
Brussels aims to reach a negotiated settlement with Washington during the 90-day pause, having already proposed zero tariffs on industrial goods in trade between the two blocks.
According to European Commission estimates, the new U.S. tariffs could result in a GDP loss of 0.8% to 1.4% for the U.S. by 2027, with a 0.2% GDP impact on the EU.
In a worst-case scenario, meaning if the tariffs become permanent or if other countermeasures are introduced, the economic consequences could be more severe, with the U.S. facing a GDP loss of 3.1% to 3.3% and the EU experiencing a 0.5% to 0.6% reduction.
On a global scale, the European Commission forecasts a 1.2% decline in world GDP and a 7.7% reduction in global trade over three years.
