In April, Trump talked about imposing 20 per cent tariffs on the European Union. Later, he threatened to increase it by 50 percent after getting angry. Now 30 percent tariff has been fixed.
In 2024, the US and EU traded 1.7 trillion euros (about 2 trillion dollars) i.e. 4.6 billion euro transactions every day. The US sells crude oil, medicines, aircraft and medical equipment to the European Union. The European Union exports cars, medicines, alcohol, aircraft and chemicals to the US.
Why Trump’s displeasure?
Trump says that EU sells more goods than America, causing a trade deficit of 198 billion euros. However, in services, the US earns more than EU, due to which the trade deficit remains 50 billion euros.
Trump says that EU policy, such as health rules (banned from chlorine on chicken and hormone-treated beef) and Value-Adead Tax (VAT) are unfair to America. The EU says that VAT applies to all goods, whether local or imported. Also, the EU cannot change its rules at the behest of America.
Prices will increase, companies’ difficulties will increase
American customers may have to pay a higher price for European goods. Companies will either increase prices or cut their profits. Companies like French luxury company LVMH (Louis Vuitton, Dior, Tiffany) have said that if tariffs are imposed, they can start production in America itself.
What will happen next?
According to the report, if the tariff increases, the US economy may lose 0.7 percent and the EU 0.3 percent. If both sides are not compromised, then American customers and global trade may have to bear the brunt of it.
