The Taoiseach has remarked that it would be “very damaging” if US President Donald Trump follows through on his threat to impose 50% tariffs on the EU starting in June.
European stocks fell sharply, and the euro lost some of its recent gains, while euro zone government bond yields declined significantly following Mr. Trump’s announcement.
In a post made on his Truth Social platform, Mr. Trump stated: “The European Union, formed primarily to exploit the United States regarding TRADE, has been quite challenging to negotiate with.”
“Our discussions with them are going nowhere!”
While speaking in Cork, Micheál Martin described Mr. Trump’s latest announcement as “a surprise,” considering there was supposed to be “a pause until early July.”
He emphasized that “everyone in the EU is acting in good faith and seeks a negotiated settlement with the United States,” highlighting that the trading relationship between the EU and the US “is the most dynamic in the world.”
According to him, “tariffs of such a magnitude [50%] would be immensely destructive and would lead to even broader disruption across the global economy.”
“Tariffs are detrimental to economies, consumers, and workers, so a negotiated pathway is the only way forward,” he remarked.
“The European Union is ready to engage in good faith with the US to arrive at a negotiated solution, and that will be the EU’s approach at this crucial moment.”
The dual threats from Mr. Trump unsettled global markets after a period of de-escalation had offered some reprieve.
The S&P 500 dropped 0.9% in early trading, the Nasdaq fell 1.5%, and European shares decreased by 1.1%. Shares of Apple AAPL.O were down 2.5% during early New York trading.
The European Commission has sought clarification from the US, with trade chiefs from Brussels and Washington scheduled to discuss the matter later.
The commission has stated that it will not comment on the tariff threat until after a conversation between European Trade Commissioner Maroš Šefčovič and US Trade Representative Jamieson Greer.
“This is a significant escalation of trade tensions,” said Holger Schmieding, the chief economist at private bank Berenberg.
“With Trump, the unpredictability is always present. But this would indeed be a major escalation. The EU would need to respond, and it would profoundly impact both the US and European economies.”
The EU is already subjected to 25% US import tariffs on steel, aluminium, and cars, alongside “reciprocal” tariffs of 10% on nearly all other goods, a levy that was set to increase to 20% after Mr. Trump’s 90-day pause ends on July 8.
Washington asserts that the tariffs aim to address the US trade deficit in goods with the European Union, which reached nearly €200 billion ($226.48bn) last year, according to the EU statistics agency Eurostat.
However, the United States holds a significant trade surplus with the EU in the services sector.
In the past week, Washington has presented Brussels with a list of demands to reduce the deficit, including the removal of so-called non-tariff barriers, such as adopting US food safety standards and eliminating national digital services taxes, as per sources familiar with the discussions.
The EU’s response has been to propose a mutually beneficial agreement that could involve both parties moving towards zero tariffs on industrial goods, the EU possibly purchasing additional liquefied natural gas and soybeans, and collaborating on issues like steel overcapacity, which both sides attribute to China.
Euro zone government bond yields sharply declined following Donald Trump’s threat of a 50% tariff.
The call between Šefčovič and Greer was scheduled as a follow-up to these exchanges, ahead of an anticipated meeting in Paris in early June.
Polish deputy economy minister Michal Baranowski, whose country holds the rotating EU presidency, indicated that the 50% tariff threat seems to be a negotiating tactic.
“The European Union and the United States are engaged in negotiations. Some are conducted behind closed doors while others unfold more publicly,” he commented to reporters during a Brussels meeting, suggesting that negotiations could continue until early July.
“The important statements we see publicly do not necessarily imply that they will materialize as actions from the US administration,” he added.
The European Commission has consistently indicated a preference for a negotiated solution but remains prepared to implement countermeasures if the negotiations do not succeed.
The bloc had previously implemented, but then suspended, duties on €21bn of annual US imports in reaction to the US metals tariffs and has compiled a list of €95bn of US goods as countermeasures to the US ‘reciprocal’ and car tariffs.
Earlier, Tánaiste Simon Harris mentioned that Ireland and the EU must persist in aiming for a “negotiated settlement” on the issue.
In a statement, the Minister for Foreign Affairs and Trade noted that the Government has emphasized the need for “a substantive, calm, measured, and comprehensive dialogue” with the US regarding tariffs.
Mr. Harris pointed out that tariffs are “harmful for Ireland, the EU, and the US,” as they will inevitably “raise prices for consumers and businesses,” and called for a rational response to the situation.
“A negotiated solution remains firmly the goal and the preferred outcome,” the Tánaiste stated.
