On 23 May, President Trump posted on Truth Social proposing a 50% tariff on imports into the US from the EU starting 1 June. President Trump threatened the EU with the higher tariff as he believes negotiations are “going nowhere”. Last year, US imports of food packaging and processing machinery under HS 8422 and 8438 from the EU totaled almost $5 billion. The proposed change in reciprocal tariffs from the 10% baseline to 50% would increase annual tariff costs by $2 B (from $465 M to just over $2 B).
The European Commission has yet to respond, and is still underway in its review of expanded retaliatory tariff action announced on 7 May (which includes food packaging and processing machinery under HS 8422 and 8438). The EU did not specify a tariff rate to be applied on EU imports within the proposed product scope. Countermeasures are not finalized and subject to change.
The US wants greater market access and removal of long-standing barriers in the EU to US goods. The reciprocal tariff negotiations are designed to bring countries to the table to enhance US access and advance US priorities to avoid the higher reciprocal tariffs. Trade agreements resulting from reciprocal tariff negotiations are not designed to be comprehensive/traditional free trade agreements with mutual concessions. President Trump’s announcement sends a signal that the Administration does not believe the European Commission is coming to the table to address these long-standing barriers.
Since the 50% tariff action has not been published in an Executive Order yet, tariffs are fluid and can change at any time. The threat of new tariffs may spur the EU to make more meaningful concessions. However, TradeMoves LLC anticipates that at a minimum, 20% higher reciprocal tariffs will be imposed on 9 July even if the EU is able to avoid the new 50% tariffs.
