Trade war averted as Government cautiously welcomes EU-US deal
European Commission president Ursula von der Leyen shaking hands with US president Donald Trump during their meeting at Trump Turnberry golf club in Scotland on Sunday. Picture: Andrew Harnik/Getty
A full-blown and hugely damaging trade war between the EU and US was averted late on Sunday after the two sides struck a deal, ending months of negotiations
A 15% baseline tariff will now apply to all EU exports to the US, with the union agreeing to buy up $750bn worth of US energy and to invest $600bn into the US economy in the years ahead.
Final details of the deal were hammered out on Sunday, as European Commission president Ursula von der Leyen met with US President Donald Trump at his golf course in Turnberry, Scotland.
The deal has been cautiously welcomed on the Irish side, with Government sources saying it provides certainty to businesses.
The baseline tariff rate will be seen as a loss for the EU, with the union repeatedly having pushed for across-the-board zero-for-zero trade. It is, however, a better result than a threatened 30% tariff rate.
Ms von der Leyen admitted the 15% would be a challenge for some, but it provides access to the US market.
Mr Trump said the deal would see European countries “open up” to US products, with the US president describing it as the “biggest deal ever made”.
While it will not be across the board, some zero-for-zero tariffs will apply to strategic products, including aircraft and component parts, semiconductor equipment, natural resources, critical raw materials and some agriculture products.
Earlier on Sunday, Mr Trump indicated that pharmaceutical products were not on the table in these negotiations.
“We can’t be in a position where we’re relying on other countries. Now, Europe is gonna make pharmaceuticals, drugs and everything else for us too – a lot – but we’re going to have also our own,” Mr Trump said.
After the deal was reached, Ms von der Leyen said the 15% rate would cover pharmaceuticals.
"This 15% is a clear ceiling. So no stacking. All inclusive,” Ms von der Leyen said.
However, she said Mr Trump’s future decisions on pharmaceutical tariffs would be “on a different sheet of paper”.
Ms von der Leyen also confirmed there was “no decision” on zero-for-zero tariffs for alcohol products, like spirits and wine, with this set to be dealt with in the next phase of talks.
On energy imports, Ms von der Leyen said it would take place over a three-year period, with $250bn of oil, liquefied natural gas and nuclear energy being purchased from the US by the EU.
She said the EU had “too much Russian gas” coming through and it was “welcome to purchase the more affordable and better LNG from the United States”.
Government sources, while welcoming the deal, were cautious and said they would need to see the finer details of the agreement.
One senior source said “nobody was jumping with joy” over the deal due to baseline tariffs, but that it did provide certainty to businesses.
Reacting to the deal, Taoiseach Micheál Martin said it brought “clarity and predictability to the trading relationship between the EU and the US”.
“That is good for businesses, investors and consumers. It will help protect many jobs in Ireland,” Mr Martin said.
“We will now study the detail of what has been agreed, including its implications for businesses exporting from Ireland to the US, and for different sectors operating here.
However, Mr Martin said the baseline tariff would make trade between the EU and US “more expensive and more challenging”.
Tánaiste and foreign affairs minister Simon Harris also welcomed the deal, saying it avoided a 30% tariff rate as well as EU retaliatory measures.
“While, we have yet to see the detail, I welcome that an agreement has been announced by Commission President von der Leyen and US President Trump,” Mr Harris said.
Mr Harris said the US had been “clear” that a baseline tariff would apply, but the Government had stressed the damaging impact it would have on exports to the United States.
“There is still a lot of detail on the agreement which will need to be brought forward including in relation to pharma, aviation and other sectors.”
Enterprise minister Peter Burke said Ireland and the European Commission are in a “challenging” position in the wake of the deal being struck. He admitted that 15% is a “very significant” tariff, but that it was crucial that a deal was done.
He explained: “I think it avoids a direct trade war, because we're very much aware that there was about €100bn in counter measures that were ready to be deployed, which would have a very significant effect on Ireland as well on the north-south economy.”
Mr Burke said that when it came to specific sectors that the “devil is in the detail,” pointing to what he said were a number of “carveouts” specifically mentioned by Ms von der Leyen when announcing the deal on Sunday.
Speaking on RTÉ's on Monday, he said he expected that the 15% tariff will be a “ceiling” for the pharmaceutical sector.
He added: ”I think the Irish government is very, very clear, and has been, the tariffs are bad.”
On energy imports, Ms von der Leyen said it would take place over a three-year period, with $250bn of oil, liquefied natural gas (LNG) and nuclear energy being purchased from the US by the EU.
When asked if Ireland was going to be buying American LNG and gas, Mr Burke said: “Not that I’m aware of, obviously I can't give a definitive on that in the hours after a deal, because it hasn't seen anything yet.”
Mr Burke also noted that Ireland is in a “challenging” position due to the unpredictability of Donald Trump.
He said the critical thing was "avoid escalation, because it would be devastating in terms of the impact, because the scale of the market is so huge”.
