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US tariffs on European goods threaten to shake up the world’s largest trade relationship

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4 days ago

July 6, 2025

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FRANKFURT, Germany, July 6, (AP): The European Union expects to find out on Monday whether President Donald Trump will impose punishing tariffs on America’s largest trade partner in a move economists have warned would have repercussions for companies and consumers on both sides of the Atlantic.

Trump imposed a 20% import tax on all EU-made products in early April as part of a set of tariffs targeting countries with which the United States has a trade imbalance. Hours after the nation-specific duties took effect, he put them on hold until July 9 at a standard rate of 10% to quiet financial markets and allow time for negotiations.

Expressing displeasure the EU’s stance in trade talks, however, Trump said he would increase the tariff rate for European exports to 50%, which could make everything – from French cheese and Italian leather goods to German electronics and Spanish pharmaceuticals – much more expensive in the U.S.

The EU’s executive commission, which handles trade issues for the bloc’s 27-member nations, said its leaders hope to strike a deal with the Trump administration. Without one, the EU said it was prepared to retaliate with tariffs on hundreds of American products, ranging from beef and auto parts to beer and Boeing airplanes.

Here are important things to know about trade between the United States and the European Union.

The EU’s executive commission describes the trade between the U.S. and the EU as “the most important commercial relationship in the world.”

The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.

The biggest U.S. export to Europe is crude oil, followed by pharmaceuticals, aircraft, automobiles, and medical and diagnostic equipment.

Europe’s biggest exports to the U.S. are pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits.

Trump has complained about the EU’s 198 billion-euro trade surplus in goods, which shows Americans buy more stuff from European businesses than the other way around.

However, American companies fill some of the gap by outselling the EU when it comes to services such as cloud computing, travel bookings, and legal and financial services.

The U.S. services surplus took the nation’s trade deficit with the EU down to 50 billion euros ($59 billion), which represents less than 3% of overall U.S.-EU trade.

Before Trump returned to office, the U.S. and the EU maintained a generally cooperative trade relationship and low tariff levels on both sides. The U.S. rate averaged 1.47% for European goods, while the EU’s averaged 1.35% for American products.

But the White House has taken a much less friendly posture toward the longstanding U.S. ally since February. Along with the fluctuating tariff rate on European goods Trump has floated, the EU has been subject to his administration’s 50% tariff on steel and aluminum and a 25% tax on imported automobiles and parts.

Trump administration officials have raised a slew of issues they want to see addressed, including agricultural barriers such as EU health regulations that include bans on chlorine-washed chicken and hormone-treated beef.

Trump has also criticized Europe’s value-added taxes, which EU countries levy at the point of sale this year at rates of 17% to 27%. But many economists see VAT as trade-neutral since they apply to domestic goods and services as well as imported ones. Because national governments set the taxes through legislation, the EU has said they aren’t on the table during trade negotiations.

“On the thorny issues of regulations, consumer standards and taxes, the EU and its member states cannot give much ground,” Holger Schmieding, chief economist at Germany’s Berenberg bank, said. “They cannot change the way they run the EU’s vast internal market according to U.S. demands, which are often rooted in a faulty understanding of how the EU works.”

Economists and companies say higher tariffs will mean higher prices for U.S. consumers on imported goods. Importers must decide how much of the extra tax costs to absorb through lower profits and how much to pass on to customers.

Mercedes-Benz dealers in the U.S. have said they are holding the line on 2025 model year prices “until further notice.” The German automaker has a partial tariff shield because it makes 35% of the Mercedes-Benz vehicles sold in the U.S. in Tuscaloosa, Alabama, but the company said it expects prices to undergo “significant increases” in coming years.

Simon Hunt, CEO of Italian wine and spirits producer Campari Group, told investment analysts that prices could increase for some products or stay the same depending what rival companies do. If competitors raise prices, the company might decide to hold its prices on Skyy vodka or Aperol aperitif to gain market share, Hunt said.

Trump has argued that making it more difficult for foreign companies to sell in the U.S. is a way to stimulate a revival of American manufacturing. Many companies have dismissed the idea or said it would take years to yield positive economic benefits. However, some corporations have proved willing to shift some production stateside.

France-based luxury group LVMH, whose brands include Tiffany & Co., Luis Vuitton, Christian Dior and Moet & Chandon, could move some production to the United States, billionaire CEO Bernaud Arnault said at the company’s annual meeting in April.

Arnault, who attended Trump’s inauguration, has urged Europe to reach a deal based on reciprocal concessions.

“If we end up with high tariffs, … we will be forced to increase our U.S.-based production to avoid tariffs,” Arnault said. “And if Europe fails to negotiate intelligently, that will be the consequence for many companies. … It will be the fault of Brussels, if it comes to that.”

Some forecasts indicate the U.S. economy would be more at risk if the negotiations fail.

Without a deal, the EU would lose 0.3% of its gross domestic product and U.S. GDP would fall 0.7%, if Trump slaps imported goods from Europe with tariffs of 10% to 25%, according to a research review by Bruegel, a think tank in Brussels.

Given the complexity of some of the issues, the two sides may arrive only at a framework deal before Wednesday’s deadline. That would likely leave a 10% base tariff, as well as the auto, steel and aluminum tariffs in place until details of a formal trade agreement are ironed out.

The most likely outcome of the trade talks is that “the U.S. will agree to deals in which it takes back its worst threats of ‘retaliatory’ tariffs well beyond 10%,” Schmieding said. “However, the road to get there could be rocky.”

The U.S. offering exemptions for some goods might smooth the path to a deal. The EU could offer to ease some regulations that the White House views as trade barriers.

“While Trump might be able to sell such an outcome as a ‘win’ for him, the ultimate victims of his protectionism would, of course, be mostly the U.S. consumers,” Schmieding said.

Related Topics:European Goods largest relationship shake tariffs threaten Trade worlds

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Kuwait, India Unite to Fight Money Laundering with New Accord

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July 9, 2025

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Kuwait, India Unite to Fight Money Laundering with New Accord

Head of the Kuwaiti Financial Intelligence Unit, Dr. Hamad Al-Mekrad, with the representative of the Indian Financial Intelligence Unit, Manish Herat, after signing the Memorandum of Understanding.

KUWAIT CITY, July 9: Kuwait’s Financial Intelligence Unit and India’s Anti-Money Laundering Bureau signed on Tuesday a memorandum of understanding (MoU) aiming to beef up cooperation on information exchange and financial intelligence efforts. In a statement to KUNA, the Kuwaiti financial watchdog’s chief Hamad Al- Mekrad said the deal, signed after a gathering of global financial watchdog body Egmont Group, is a testament to Kuwait and India’s collective commitment to boost transparency and cooperation, based on the principles and guidelines of the global financial organization of intelligence units.

The agreement is a major step forward towards clamping down on financial crime at a time of growing challenges that require greater cooperation and information exchange. The level of cooperation between the Kuwaiti and India financial intelligence units has been on an upward trajectory even before the new deal came to fruition, added the official, expecting the agreement to be instrumental in simplifying the flow of bilateral information exchange, he underlined.

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Trump’s tariffs may cast a pall over Rubio’s first official trip to Asia

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19 hours ago

July 9, 2025

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US President Donald Trump, right, puts his hand on shoulder of Secretary of State Marco Rubio, center, as Attorney General Pam Bondi, left, looks on during a cabinet meeting at the White House on July 8, in Washington. (AP)

WASHINGTON, July 9, (AP): Sweeping tariffs set to be imposed by President Donald Trump next month may cast a pall over his top diplomat’s first official trip to Asia this week – just as the US seeks to boost relations with Indo-Pacific nations to counter China’s growing influence in the region. Trump on Monday sent notice to several countries about higher tariffs if they don’t make trade deals with the US, including to a number of Asian countries.

The move came just a day before Secretary of State Marco Rubio planned to depart for a Southeast Asian regional security conference in Malaysia. Top diplomats and senior officials from at least eight countries that Trump has targeted for the new tariffs, which would go into effect on Aug. 1, will be represented at the annual Association of Southeast Asian Nations Regional Forum in Kuala Lumpur that Rubio will attend on Thursday and Friday.

State Department officials say tariffs and trade will not be Rubio’s focus during the meetings, which the Trump administration hopes will prioritize maritime safety and security in the South China Sea, where China has become increasingly aggressive toward its small neighbors, as well as combating transnational crime.

However, Rubio may be hard-pressed to avoid the tariff issue that has vexed some of America’s closest allies and partners in Asia, including Japan and South Korea, which Trump says would face 25% tariffs absent a deal. Neither of those countries is a member of ASEAN but both will be represented at the meetings in Kuala Lumpur. Rubio’s “talking points on the China threat will not resonate with officials whose industries are being battered by 30-40% tariffs,” said Danny Russel, vice president of the Asia Society Policy Institute and a former assistant secretary of state for East Asia and the Pacific during the Obama administration.

“In fact, when Malaysian Prime Minister Anwar Ibrahim last week said ASEAN will approach challenges ‘as a united bloc’ – he wasn’t talking about Chinese coercion, but about U.S. tariffs,” Russel said. Among ASEAN states, Trump has so far announced up to 40% tariffs on at least six of the 10 members of the bloc, including the meeting host Malaysia, which would face a 25% tariff mainly on electronics and electrical product imports to the United States.

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Southeast Asian foreign ministers meet as US tariffs loom

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20 hours ago

July 9, 2025

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From left to right, Indonesia’s Foreign Minister Sugiono, Lao Minister for Foreign Affairs Thongsavanh Phomvihane, Singapore’s Foreign Minister Vivian Balakrishnan, Thailand’s Foreign Minister Maris Sangiampongsa, Vietnam’s Foreign Minister Bui Thanh Son, Malaysia’s Foreign Affairs Minister Mohamad Hasan, Philippine Foreign Secretary Theresa Lazaro, Brunei’s Minister of Foreign Affairs Erywan Yusof, Cambodia’s Foreign Minister Prak Sokhonn, Myanmar Ministry of Foreign Affairs representative Kyaw Nyun Oo, East Timor Foreign Minister Bendito dos Santos Freitas and ASEAN’s Secretary-General Kao Kim Hourn pose for a group photo during a plenary session of the Association of Southeast Asian Nations (ASEAN) Foreign Ministers’ meeting at the Convention Centre in Kuala Lumpur Malaysia on July 9. (AP)

KUALA LUMPUR, Malaysia, July 9, (AP): Malaysian Prime Minister Anwar Ibrahim warned Wednesday that global trade is being weaponized as Southeast Asia’s foreign ministers opened an annual meeting while facing the looming threat of U.S. trade tariffs. The threat of US tariffs has jolted the Association of Southeast Asian Nations, a 10-member bloc that includes some of the world’s most trade-dependent economies.

Six ASEAN members are among the 14 countries that could see duties on their exports to the US skyrocket on Aug 1. Launching the Association of Southeast Asian Nations foreign ministers’ meeting, Anwar said the world is now witnessing an era where “power unsettles principle” and “tools once used to generate growth are now wielded to pressure, isolate and contain.”

Without mentioning the US by name, he again urged ASEAN to work together to respond to trade threats. “Our cohesion must not end at declarations,” he said, calling for members to increase intra-ASEAN trade, invest in regional integration, and reduce strategic dependencies on external powers. “This is no passing storm,” he said. “It is the new weather of our time.”

Trump first announced tariffs in April, but then delayed them for 90 days to allow for deals. On Tuesday, he announced new tariff with rates of between 25%-40% on 14 countries, which will go into effect Aug. 1 unless new deals are struck. He also threatened to increase tariffs if any countries retaliate. Many ASEAN members have launched bilateral talks with the U.S., but officials have said they plan to hold an ASEAN-U.S. summit later this year to seek a common position.

So far, only Vietnam has secured a deal, bringing down its tariffs from 46% to 20%. The list threatens 36% tariffs for Thailand and Cambodia, 32% for Indonesia, 25% for Malaysia, and 40% for Laos and war-torn Myanmar. In addition to confronting trade fallout, the bloc faces mounting internal challenges. The ongoing civil war in Myanmar and a border dispute between Thailand and Cambodia are also on the agenda.

The gathering in Malaysia will be immediately followed by a series of critical meetings with ASEAN’s major trade partners, including the United States, China, Japan, Russia, India, and the European Union, scheduled for Thursday and Friday. U.S. Secretary of State Marco Rubio, who last week cancelled trips to Japan and South Korea, will arrive Thursday for the talks on his first visit to Asia. Others visiting foreign ministers include China’s Wang Yi and Sergei Lavrov of Russia. Analysts said these talks will test ASEAN’s ability to assert its voice amid escalating geopolitical tensions.