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TRANSCRIPT
European Union Officials have put a pause on the ratification of a US trade deal after the future of the tariffs has once again been cast with doubts.
After negotiations in July last year, the EU and US President Donald Trump agreed on a 15 per cent tariff on European goods.
Now, after the US Supreme Court ruled those tariffs were illegal, Donald Trump has promptly signed orders to impose a new global tariff of 15 per cent.
Alberto Rizzi, a Policy Fellow at the European Council on Foreign Relations, says the scope of the new levies may operate differently to those currently in place.
"The Trump (US President Donald Trump) administration has decided to use a different legal tool that allows to impose 15 percent maximum tariffs for a maximum of 150 days, but that has become the new global, in a way, so everybody is supposed to be tariffed in the same way, save for other tariffs on other grounds that are sector-specific or related to national security or unfair trade practices."
The Supreme Court ruling was not only among the most significant economic cases to reach the Supreme Court in years, but it also marked the first time the conservative majority justices voted against Donald Trump in a major case.
The court found that Mr Trump's use of a 1977 international emergency economic law to impose the global tariffs was illegal and that use of the law required congressional approval.
With the ruling jeopardising a key policy pillar of Mr Trump's second term, he lashed out at the court and has now turned to other trade laws in an effort to recreate the policy.
In a post on his social media platform Truth Social, Mr Trump issued a stern warning to any country thinking it won't face tariffs.
"Any Country that wants to “play games” with the ridiculous supreme court decision, especially those that have “Ripped Off” the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to. BUYER BEWARE!!! Thank you for your attention to this matter. President DONALD J. TRUMP"
With the European Union International Trade Committee set to vote on the ratification of the US trade deal, known as the Turnberry Deal, talks have now been paused until further clarification is provided.
While the Supreme Court ruling does not directly impact bilateral deals with individual countries, they were negotiated through threats of imposing the now-invalidated tariffs as leverage.
In turn, this has also sparked a wave of questions and uncertainty over deals made with countries like Brazil, India, and the United Kingdom.
Chair of the European Union trade committee, Bernd Lange, says the deal cannot be ratified without further details.
"This gives us the impression that this is so uncertain what now the development will bring. This 15 per cent is limited based on the Trade Act 122 for 150 days and nobody knows what will happen after. And it's unclear if there will be additional measures or how the United States will really guarantee that the deal of Turnberry will be respected."
Mr Lange pointed to products such as European cheeses, with US importers paying a 15 per cent levy on Parmesan and Camembert before last year's trade deal.
Now, he says, if the new tariff is added to the existing rate, those tariffs will rise to 30 per cent.
With more meetings planned to discuss the developments, Mr Lange says both sides must respect the deal.
" And we will have another shadows meeting next week on Wednesday to have a look how the development is going on. So we are sticking to the deal. The deal is a deal, but it has to be respected from the other side as well."
While the Turnberry deal in 2025 faced some criticism from Europeans, policymakers saw it as a relatively good conclusion given those levelled on other US trade partners.
Now, Alberto Rizzi says many of the beneficial aspects of that deal have been dashed.
"If we look at the trade deal of last year, there were three points. One is the comparative advantage, one was the certainty and the third one was to keep the US engaged on Ukraine, at least from the EU side. The third element remains, but the first one is completely gone and the second one has been massively hollowed out. So many of the reasons that made a difficult deal palatable to the Europeans are not on the table anymore, which means it's going to be difficult to find adequate framework for the next deal or to safeguard most of this one."
Some economists say that moving from country specific tariffs to sweeping global measures could have considerable implications around the world.
Under the never-before-used section of the Trade Act of 1974 that Donald Trump is relying on to pass new levies, the measures can only be in effect for 150 days before requiring congressional approval to extend them.
Research Fellow at the Bruegel Think Tank, Niclas Frederic Poitiers says there's a large degree of uncertainty about just how, and for how long, the tariffs will be applied.
"It is unclear what will be the rules under this new tariff, so this has to be calculated good by good. It is not unlikely that there will be goods where the tariff rate will be somewhat higher than under the agreement of last year. At the same time, it is not clear if these tariffs will stand for very long anyway. So right now, there's a lot of uncertainty over this. I think the status quo for European companies is probably comparable to what we had before, but with a big grain of uncertainty in there that you do not know what will apply in a couple of months."
After the latest announcements, Wall Street stocks fell alongside the US dollar index, which fell 0.2 per cent against major currencies.
Concerns over the possible new levies also wiped over 1 per cent off Germany’s DAX index on Tuesday, while France's stock market lost 0.22 per cent.
European Commission spokesperson Olof Gill says the European Union is trying to preserve stability in the face of substantial instability.
"We are trying to maintain predictability for businesses, for consumers, in the face of some substantial unpredictability. And, therefore, we as a protagonist in this saga are staying calm. We're talking to our US counterparts, we're talking to all relevant interlocutors here in the EU and with our global partners. When we have a clear picture on precisely what the implications of the Supreme Court ruling are for the US, what steps they intend to take, what measures they intend put in place arising from that ruling, then we will have the clarity we need to make a proper assessment and take further decisions. But to be clear, at this point in time we do not have that and it's not up to us to provide it."
