Europe: 30% US tariff would ruin trade, force export rethink

The 30% tariff on European goods threatened by US President Donald Trump would, if implemented, be a game-changer for Europe, wiping out whole chunks of transatlantic commerce and forcing a rethink of its export-led economic model.

- PHILIP BLENKINSOP FRANCESCO CANEPA

European ministers meeting in Brussels on Monday remained convinced they can bring Trump back from the brink before his Aug 1 deadline and reach a deal that would keep the $1.7 trillion two-way trading relationship broadly intact.

But the wild swings in Trump's mood towards the European Union — which he has sometimes labelled as friendly and at other times accused of being set up specifically to destroy the United States — keep the 30% threat very much alive for now.

"It will be almost impossible to continue the trading as we are used to in a transatlantic relationship," EU trade chief Maros Sefcovic said of the 30% rate before meeting ministers and officials of the 27 EU capitals to give them an update.

"Practically it prohibits the trade."

EU officials had been hoping they could limit the damage by agreeing a baseline tariff around 10%, the one currently in place, with additional carve-outs for key sectors like autos.

Last year the United States accounted for a fifth of all EU exports — its largest partner. Trump's bugbear is the $235 billion US deficit generated by the goods component of that trade, even though the US earns a surplus on services.

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The impact of making European exports — from pharmaceuticals to autos, machinery or wine — too expensive to be viable for American consumers would be instantly tangible.