The European Parliament has so far not ratified the EU-US trade agreement due to numerous disagreements related to the policies of US President Donald Trump. These include his expressed intention to control Greenland – an autonomous territory of Denmark – and the imposition of a 50% protective tariff on EU steel and aluminum exports to the US market, whereas the bilateral trade agreement stipulated a reciprocal tariff of only 15%.
Subsequently, to pressure the European Parliament into quickly ratifying the agreement, the US threatened to impose a 25% protective tariff on EU cars and trucks from June 4th if the European Parliament did not ratify the agreement by that date.
The new agreement reached between the US and the EU is essentially a temporary agreement on the implementation of the bilateral trade agreement, aimed at preventing a trade war from erupting between the two sides after June 4th. Accordingly, the US will not impose a 25% protective tariff on EU cars and trucks, and the EU will not take retaliatory measures against the US. This helps both sides save face, as neither side loses; it also provides more time to stabilize bilateral economic and trade cooperation in the future, even if the period of stability may not be long. For Donald Trump, this outcome demonstrates that he doesn't need to change or abandon his policies to achieve results, especially given that the US administration needs the impact of the agreement to escape its increasingly difficult domestic and foreign situation. From the EU's perspective, the interim agreement helps the bloc avoid a trade war with the US, while also freeing the European Parliament from the awkward situation and the perception of self-contradiction when approving a bilateral trade agreement with the US.
Both sides accepted this interim agreement because, in essence, each side received very fundamental concessions from the other. The EU agreed to reduce tariffs first, and then the US would gradually adjust the corresponding tariff levels. The US is allowed to continue applying protective tariffs of 50% on EU steel and aluminum products until December 31, 2026, after which it will have to reduce them to 15%. At the same time, US industrial goods can be exported to the EU market with a 0% tariff rate. Thus, US goods can access and penetrate the EU market very easily. In addition, the EU also agreed to extend the validity of the bilateral trade agreement with the US until the end of 2029, that is, after the current US President Donald Trump's term and after the next European Parliament elections.
Besides meeting the urgent goal of avoiding a trade war with the US, the EU's benefit from this interim agreement is that it binds the US to specific commitments that, if not strictly adhered to, will result in immediate sanctions and retaliation from the EU. The EU expects this agreement to bring much-needed stability to its overall relationship with the US. The EU also gains more time to promote and perfect its economic and trade independence from the US. Therefore, it can be said that both sides reached this agreement while maintaining a defensive stance for the future.
Source: https://hanoimoi.vn/thoa-thuan-tam-thoi-trong-thu-the-774894.html
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