According to President Trump, the United States and European Union have agreed to launch a “new phase” in diplomatic relations and work towards a policy of “zero tariffs“.
It has been agreed that an increase in trade in services and agriculture will soon follow, including a higher level of soy bean exports to the EU.
The announced agreement has undoubtedly defused what was reported to be a fully-fledged trade war between the two powers, sparked by Trump’s imposition of tariffs on European steel and aluminium exports.
In what was described as a “good, constructive meeting” by Mr Junker, the two have agreed to temporarily postpone any further tariffs while negotiations are underway- and to work on reforming the World Trade Organisation.
According to President Trump, today’s agreements mark a “very big day for free and fair trade”.
The EU has announced plans to increase its purchases of liquefied natural gas (LNG) from the United States whilst also increasing trades in services and agriculture. However, Mr Junker remarked that striking a deal on zero tariffs on industrial goods was his “main intention”.
As of yet no announcement has been made on vehicle tariffs, and it has not yet been declared whether any progress has been made on seeking a resolution to the issue of a 25% import tariffs imposed by President Trump.
Analysis from Oliver Murphy- Editor
Today’s agreement signals a promising return to rational discussion and a move away from tit-for-tat tariffs.
It would be unjust to suggest that the President is wrong to challenge the current trading system. According to the WTO, US average tariffs (trade weighted) are at 2.4%- lower than those of the EU (3%).
However, whilst Trump’s originally aggressive approach will have played well to his supporters in the “rust belt”, in the complex world of diplomacy he would have stood little chance of compromise.
Perhaps we shouldn’t get ahead of ourselves. Whilst the two leaders have certainly turned a page on trade, today’s announcement merely resembles a resumption of a dialogue. There has yet been a reassessment of national securities barriers or the current state of automobile tariffs.
Clearly, the avoidance of a cataclysmic trade war does not in any way resemble success. Indeed, there is still much work to be completed if full confidence is to be restored not only in the markets but the Office of the President.