“This is a very powerful agreement, it is a very important agreement, it is the most important of all the agreements,” said Donald Trump this Sunday, July 27 after his interview with the president of the European Commission, Ursula von der Leyen.
Brussels and Washington finally concluded a commercial agreement that provides customs tariffs of 15% in European exports to the United States. Until now, they have been 10% since the arrival of Donald Trump to the White House that threatened them with taxes of 30% on August 1. However, exemptions are planned in certain sectors.
Donald Trump, however, said in this press conference that he had “three or four friction points”, without specifying more.
This is what we can say about the agreement this Sunday, since it seems to be arising.
• What does that mean?
The United States will take additional taxes of the European Union products. This tax will generally be equivalent to 15% of the value of the goods in question. It must be paid when the property reaches the American soil.
In principle, the importer pays customs barriers, that is, the company that will buy the European product. The consumer will not pay directly, but it is very likely that companies, which currently assume the additional cost, transmit a significant part of the prices paid by US homes.
• What changes?
The United States can buy fewer products made in Europe and France, because it will cost more.
If most products will be taxed in 15%, others, such as steel and aluminum, will be reached with higher customs tariffs.
The EU is currently attached to a 25% tax in cars, 50% in steel and aluminum.
US customs tasks of 15% include the automotive sector, also said that US President Donald Trump.
Before Trump’s return in power, imports from France were taxed on average to 3% according to CEPII (Prospective Studies and International Information Center).
Customs barriers had already increased in recent weeks. In June, CEPII estimated that French products were now reached by an average 13%tax.
In fact, the agreement reached between the EU and the United States would support this situation, while Europeans hoped to convince Donald Trump to return to the lowest customs barriers.
• What will be the consequences?
In imposing these customs tasks, Donald Trump intends to discourage the purchase of foreign products. This will have negative effects on the European economy, but they should remain limited.
CEPII estimated the consequences for France, when studying the impact on the Gross Domestic Product (GDP) that measures economic activity. For France, the Research Institute estimates a fall between 0.1% and 0.3%. They would be relatively close to Spain and Italy, but more important for Germany, the country that has to lose.
But some sectors could be particularly affected. In the case of France, aeronautics and naval construction are particularly threatened.
Ursula von der Leyen said that “customs rights between the EU and the United States would not apply to certain products, including aeronautics” without specifying what the products in question would be. As an aeronautical reminder, so far there were no customs rights between Europe and the United States under a free trade agreement dating from 1979.
In the case of Germany, the automotive sector would be the most affected. Although Trump finally planned that the 15% agreement included the car.
Therefore, it is likely that these customs tasks have a negative effect on French growth, even if the health of the hexagonal economy depends more on the state of its domestic demand, energy prices and its exchanges with other European countries.
The increase in these tensions, combined with the political uncertainty nationwide, however, led to a downward review (-0.3 points) of the France growth forecast by the OFCE (French Observatory of Economic Conditions). It would only be 0.5% this year and 1.1% next year.
Therefore, the context contributes to weak growth, while the OFCE expects a rapid increase in unemployment (9% from 2027 against 7.4% currently). This can weigh on public finances already under pressure. Low growth tends to reduce income and increase spending.
• What does the EU compromise?
According to Donald Trump, the block of 27 members agreed to buy $ 750 billion in American energy and earn $ 600 billion in investments in the United States.
• Why did Trump make this decision?
By increasing customs tasks, Donald Trump intends to promote companies installed in the United States and promote installation on their ground. However, many economists criticize the effectiveness of this method and the costs that it will not stop generating.
Basically, the US president hopes to correct the commercial deficit of his country (782 billion euros in 2024).
According to him, this deficit would materialize the “structural imbalances of the global commercial system” and the unfair economic policies of the rest of the world, which would attract US salaries down.
The Treasury Department recalls that this commercial deficit dates from the 1970s, but has been strengthened since 2022.
• Why does Europe attack?
After China, the European Union is, therefore, the space with which the United States accuses its strongest commercial imbalance of the goods.
Keep in mind that Donald Trump often forgets to specify that his country issues a very important excess in services, technological in particular, with the EU.
When both counting, the EU only has a net surplus of 50 billion euros.
It should also be taken into account that the United States deficit is increased by the strategies of certain US multinationals, especially in the pharmaceutical field. They reduce their tax level by installing their central offices in Ireland, which has chosen to become a fiscal paradise.
In addition, all EU member states are not surpluses. According to CEPII, the positive balance of goods is mainly released by two countries: Germany and Italy. France is almost balanced. On the contrary, Berlin launched a record of 70 billion euros (+10%) in 2024.
Donald Trump is not the first US president to complain about it. In his time, Barack Obama has already strongly criticized German economic policy, considering that his strong growth driven by exports destabilized the euro zone and the world economy, as Deutsche Welle reported.
He called the country to balance its economic model by increasing its internal application, particularly through salary increases.
Americans also criticize China, who have increased their growth dynamics through exports to a colossal level. Its commercial surplus reaches $ 1,000 billion today, allowing the fear of the very important destruction of jobs, particularly in Europe, as Ursula von der Leyen still denounced this Thursday, July 24 during a visit to China.
Source: BFM TV
