US President Donald Trump announced on Wednesday that his administration will impose a 25% tariff on goods imported from the European Union soon. While addressing a cabinet meeting, Trump stated, ‘’We have made a decision and will announce it very soon. It will be 25% generally speaking, and that will be on cars and other things.’’
Tariff differences between US and EU
The decision has been taken given long-standing concern from US officials about trade imbalances between the two economies. At present, the European Union levies a 10% tariff on passenger vehicles, which is remarkably higher than the 2.5% tariff by the United States.
This difference has been a crucial issue in trade discussions with the US, stating that such policies form an unequal playing field for American automakers.
Along with tariffs, US trade representatives have also flagged issues about Europe’s value-added tax (VAT) policies. Most EU countries charge a VAT of a minimum of 17.5% which further results in increasing costs for American businesses that are exporting to the region. The upcoming tariff decision has been seen as part of the administrator’s bigger plan to tackle trade imbalances and promote fairer policies between the two markets.
(With inputs from Reuters)