US-EU Tariffs, The Day After/ "A no-deal that still leaves (too many) problems to resolve"
The most important details of the US-EU tariff agreement are still missing. And they're unlikely to arrive anytime soon.
The day after the agreement on tariffs between the United States and the European Union was reached , comments were rather ambivalent: on the one hand, the EU had apparently managed to avoid the worst and provide certainty to economic operators after Donald Trump's various declarations on tariffs in recent months; on the other, Ursula von der Leyen had apparently given up on the tough confrontation, thus not obtaining better conditions, but, on the contrary, having to accept those that include investments overseas and the purchase of weapons and energy products from the US.
According to Mario Deaglio, Professor Emeritus of International Economics at the University of Turin, "Both interpretations are correct. It must be acknowledged that the EU has maintained a sufficiently unified position in recent weeks; there have been no major internal divisions.
And we have to admit that the United States is not as strong as it seems, because, once again, after the high-sounding announcements on tariffs, when it comes to signing the agreements not all the details are worked out. In this case, it seems to me that on Sunday there was no final discussion of what is considered the real weapon in Brussels' hands: the taxation of Big Tech .
Indeed, it was said that it could be put on the negotiating table, but nothing was said about it in the statements following Sunday's meeting.
That's right. Everyone can claim victory right now, but in reality, it seems to me, there's a lot of confusion about this.
Overall, do you think the agreement reached is a good one?
I would call it a "non-agreement," in the sense that some common ground has been found beyond which it's best not to go. Some sectors have been identified that should receive differentiated treatment, such as aeronautics, to also allow the production of aircraft from American manufacturers. But beyond this, a real agreement is yet to be reached. We'll have to wait to think about resolving all the looming complications.
Suffice it to say that duties on steel and aluminum remain at 50%, but if used to produce cars they will eventually be subject to a 15% tariff…
Look, if we carefully examined the list of goods traded internationally, we'd find plenty of cases like this. There's still confusion after this agreement, but in Brussels and Washington, everyone wants to take a break for the month of August and go on vacation more relaxed. We'll talk about it later, while we wait to see what happens to the American economy, which some analysts believe is already in recession. I won't comment on this because there isn't enough evidence yet.
One interpretation of the agreement is that the EU accepted certain conditions, such as those regarding the purchase of American LNG, knowing that once Trump's term ends, it could call everything into question. What do you think?
Indeed, as we've seen with Trump, it's possible that bilateral agreements could be called into question quickly. The real question is how we'll get to 2028 economically, given the sudden change in the economic situation.
Do you think any country in the EU has been more benefited or disadvantaged than others by this agreement?
It's difficult to say, given that all the details haven't been finalized yet. Meanwhile, it seems to me that both Washington and the individual member states have understood that it was impossible to pursue bilateral agreements without passing through Brussels. There will likely be some productive sectors penalized by the agreement, as it currently stands.
Which sectors are involved? And do you think it's necessary to provide compensation, including at the European level?
I'm thinking of the agri-food sector, particularly mid-priced products, because I don't expect higher-priced ones to experience significant drops in demand from American consumers. I believe the same could apply to mid-range textile products. As for compensation, I believe it could be considered at the European level: an issue that needs to be addressed even before discussing the 2028-34 European budget.
Also because, in addition to the tariffs, the devaluation of the dollar is currently weighing on European exports ...
Yes, the dollar has lost about 15% since the beginning of the year. Washington hopes this will make it more profitable to produce in the United States, but reshoring still seems a distant goal, especially given that labor costs are not sufficiently competitive.
Do you think that, after this tariff agreement, given the impact it will have on the Italian economy, the budget law, still in draft form, will need to be revised?
I don't know. It seems to me that, right now, even in Italy, the priority is planning vacations and being able to get away for a few days. Therefore, it will be an issue to address upon returning from vacation, perhaps even with some additional useful data.
(Lorenzo Torrisi)
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