A New Chapter in Transatlantic Trade: Ursula von der Leyen’s Response to Trump’s Tariff Announcement
On Thursday, 18th June 2020, European Commission President Ursula von der Leyen welcomed the announcement made by US President Donald Trump regarding a pause in reciprocal tariffs. This decision comes after months of escalating trade tensions between the two economic powerhouses.
Background
The US and the European Union (EU) have been engaged in a trade dispute over subsidies for Airbus and Boeing. The World Trade Organization (WTO) ruled that both sides were providing illegal subsidies to their respective aircraft manufacturers. In response, the US imposed tariffs on EU goods worth $7.5 billion, while the EU retaliated with tariffs on US goods worth $4 billion.
The Announcement
During a press conference, Trump stated that he would suspend the tariffs, effective immediately. He also mentioned that he was hopeful that the EU would reciprocate by dropping its tariffs on US products. Von der Leyen responded positively, expressing her hope that this step would lead to a “more predictable and stable transatlantic economic relationship.”
Impact on Individuals
For individuals, this news could mean lower prices for certain consumer goods. According to a report by the European Commission, US tariffs on EU imports had led to an increase in prices by an average of 20%. With the tariffs being suspended, this price hike is expected to be reversed, resulting in cost savings for consumers.
Impact on the World
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Global Economy: The suspension of tariffs is likely to have a positive effect on the global economy. According to some estimates, the tariffs had reduced global GDP by 0.1%.
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Trade Relations: This development could be a sign of improving relations between the US and the EU. It may pave the way for further negotiations and a potential trade deal.
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Businesses: The removal of tariffs could benefit businesses, particularly those in the agriculture and manufacturing sectors. It may lead to increased trade flows and boost economic growth.
Conclusion
The suspension of tariffs by the US and the EU is a welcome development in the ongoing trade dispute. It is a positive sign that could lead to improved economic relations between the two parties. For individuals, it could mean lower prices for certain goods. For the global economy, it could result in increased trade flows and economic growth. Only time will tell if this is a permanent solution or a temporary reprieve in the ongoing trade tensions.
