THE European Union has gained leverage in trade talks with the United States after a US court cast doubt on the legality of Washington’s “reciprocal” tariffs, EU officials said yesterday.
A US federal appeals court temporarily reinstated President Donald Trump’s tariffs on Thursday, a day after a US trade court ruled that Trump had exceeded his authority in imposing the duties and ordered an immediate block on them.
“The uncertainty as to the legality of the ‘reciprocal’ tariffs certainly gives us extra leverage,” one EU official close to the talks said. “The talks will continue, as formally we still look for zero-for-zero tariffs.”
If the court system ultimately rules against Trump’s use of the IEEPA emergency act, the administration could make use of other provisions in the US Trade Act such as Section 301, which has been broadly used with China.
“You’d need to establish ‘injury’ and a legal basis and it takes months. Administratively, they might still do a hatchet job ... given checks and balances are not that strong in the US right now but it won’t be as easy or done as quickly as IEEPA,” Niclas Poitiers, research fellow at EU Brussels think tank Bruegel, told Reuters
“It would at least buy the EU some time.”
The EU was willing to discuss some non-trade barriers with the US, EU officials said, but would not touch the EU’s taxation system – such as the value added tax or digital tax – or food safety standards.
The EU officials said the uncertainty created by the court rulings and the Trump administration’s tariff policy had a positive aspect for Europe, which was seen by markets as an oasis of stability in comparison.
“This is the watchword: uncertainty. It is impossible to know what the status of the tariffs will be next week, not to mention next month,” one of the EU officials said.
“If you want sane, stable, even boring, rules-based order and predictable business environment, Europe is the place for you.”
Meanwhile, some European companies, worried over the uncertainty and possible major hits to their business, are holding their own talks with US authorities.
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