00:00A deal is a deal. That's the EU's position in the wake of a ruling by the U.S. Supreme
00:05Court,
00:06which found that many of Donald Trump's tariffs were illegal. In response, Trump has since
00:11announced across the board temporary tariffs on all U.S. trading partners, which now stand
00:16at 15 percent. The chair of the European Parliament's Trade Committee has said all of this
00:22amounts to tariff chaos and that the new tariffs are a breach of the deal that the EU had already
00:27reached with the White House. In fact, a vote in the European Parliament to ratify that deal that
00:31was scheduled for tomorrow has been suspended. Luke Schrago has the story.
00:39Now facing a fresh set of 15 percent U.S. tariffs, Europe wants clarity over the trade deal it struck
00:45with Washington last year, which it's now holding off on ratifying.
00:49A deal is a deal. Both sides have agreed to and indeed have a duty to honor their part of
01:00the
01:00agreement we made with the U.S. So now we are simply saying to the U.S. it's up to
01:06you to clearly show
01:06to us what path you are taking to honor the agreement. With the U.S. Supreme Court striking
01:13down existing tariffs, the White House pivoted to a global blanket duty of 15 percent under a
01:19different legal framework, one that would come in on top of certain already existing levies and make
01:24it more expensive for countries than those that didn't even have trade deals agreed. In the case
01:30of the European Union, that could mean up to 17 or 18 percent on its goods rather than the 15
01:35percent negotiated. For the U.S. though, it's just a matter of legal footwork and insisting that tariffs
01:41aren't going away, its trade representative called on nations to stick to the deals they've made.
01:46We're going to conduct investigations that can allow us to impose tariffs if it's justified
01:50by the investigation. So we expect to have continuity in the president's tariff program.
01:54We know that these laws work. They're tried and true. And so we'll have continuity. The
01:59president, the policy hasn't changed, just the tools have changed.
02:03The new tariffs, however, come with a 150-day time limit built in, with U.S. congressional approval
02:09needed to extend them. Something Donald Trump declared over social media on Monday that he
02:15simply didn't need. And for more on this story, I'm joined by Guntram Wolff, a senior fellow at
02:22Bruegel. Thanks so much for being with us here on France 24. First of all, do you agree with the
02:27criticism from the EU that these new tariffs are a breach of the deal the bloc had already reached
02:33with the White House? And if so, how should the EU respond?
02:39Well, look, I mean, these new trade deals, these new tariffs create a lot of uncertainty
02:45for European exporters, for the European economy. I mean, let's remember that
02:53the deal before was a pretty long-lasting deal. The idea was that this would last until the end,
03:00at least of the Trump presidency, now we are in on a different legal basis with the deal that
03:06will be probably only 150 days of tariffs. Then Congress has to approve it under this legal base.
03:16So this creates uncertainty. And of course, from the perspective of a U.S. consumer, they will say,
03:22OK, wait a minute. If in 150 days these tariffs won't exist anymore, then I will postpone buying my
03:30next big car from Europe because then I might have better terms. So I think in the short term,
03:37this is economically a net negative. But politically, let me stress that it's, of course,
03:43a big positive because it shows that U.S. Congress, U.S. Supreme Court is actually imposing checks and
03:51balances on this U.S. president. And that is very, very important for Europe as well.
03:55As you're pointing out here, Trump is using a trade law from 1974 that allows him to impose
04:00these tariffs for just 150 days before they need to be approved by Congress. So there is a scenario
04:06in which these tariffs go away in just five months, given that the midterms are coming up.
04:11Does that at all change the calculation for the EU?
04:17Yeah, I mean, it does. Because if you are an exporter, I mean, you want clarity. You want to know
04:25how the tariffs will look like in 150 days. And now there is this massive uncertainty whether he will
04:31bring this to Congress, U.S. Congress or not. And if he does bring it to U.S. Congress, will
04:37U.S.
04:37Congress actually be ready to impose this heavy tax on U.S. consumers or not. And so my expectation is
04:47that in the short term, actually, it will have negative effects on European exports to the U.S.
04:54because U.S. consumers will try to postpone some of their consumption decisions until they have
05:02clarity on this tariff. And let me really point out one more important issue. I mean, what really
05:09happens here is that the legal base for the U.S. president to just at will tax foreign exporters
05:17has really been put into question, which I think is good, but which at the same time raises lots of
05:24questions about U.S. debt sustainability. I mean, let's be clear, U.S. Congress will find it extremely
05:31difficult to agree on taxes, will find it extremely difficult to agree on new tariffs. And so at the
05:38end of the day, the high deficits might simply be very difficult to fund here. And so, yes, then this
05:47has implications not just for trade, but also for the stability and the creditworthiness of the U.S.
05:55debt and the U.S. government.
05:56I'm reminded that late last year, Trump slapped a 39 percent tariff on Switzerland because the
06:02president of Switzerland had, quote, you know, rubbed him the wrong way. It seems he won't have
06:06the ability to do that going forward. So given that Trump has been stripped of his power to impose
06:12tariffs on these individual countries, does that put the EU in a greater position of power? Does
06:18the EU now have leverage that it didn't have before? Yes, I think politically Europe has gained from
06:26this. The U.S. Supreme Court has limited the powers of the president. And that is positive because it has
06:38really limited the capacity of the U.S. president to just arbitrarily, at his own will, identify
06:48individual countries and, you know, exercise massive political power on these individual small
06:55countries. So yes, that has strengthened the EU's position as a trade negotiation bloc. And I think
07:03the U.S., the EU should be wise in using it. We don't want to escalate. But certainly we need
07:09clarity
07:10on the tariffs going forward. You know, you look at a country like China, which did not really appease
07:15Trump through all of this and negotiations when he was threatening tariffs of 125 percent. And now,
07:21like every other country, they're facing a 15 percent tariff on exports to the U.S. So what's the
07:27lesson here dealing with Trump that appeasement is not the right strategy, do you think?
07:36Well, I'm careful with that. I mean, first of all, we did do some appeasement, if you wish,
07:43in the Scotland deal with the U.S. because of the very strong security vulnerability that we've
07:51certainly still had last year when it comes to Ukraine and the U.S. support for Ukraine.
07:56And so you didn't want to risk that. And let me also highlight that the Chinese strategy,
08:03even though it was a strategy of strength, also in the end did not deliver lower tariffs. I mean,
08:10China did pay higher tariffs in the end than the EU paid towards the U.S. And so now actually
08:19the deal, the Supreme Court now has actually led to lower tariffs for Chinese exporters to the U.S.
08:28So in that sense, I think China is actually also benefiting from the decision of the Supreme Court
08:35here. And no, I don't think I would immediately say appeasement has been the wrong strategy. It was
08:43a moment of difficult compromises because of the difficult security situation in Europe.
08:50So contrary to what Trump claims, at least 90 percent of these tariffs have been paid for by
08:55American consumers and U.S. companies and foreign exporters have absorbed a much smaller portion of
09:01the costs. That said, how do trading partners go about getting back the money that they've lost?
09:07Is there is there any recourse or is this just more uncertainty?
09:14Well, I think this is still very unclear. The chair of the European Trade Committee has said that
09:21European exporters can claim some money back. But I frankly think this is going to be an extremely
09:28difficult legal process. There will be lots of litigation in U.S. courts by U.S. companies,
09:35by U.S. consumers. We have seen some U.S. governors from U.S. states already asking money to be
09:43paid
09:43back to their own citizens. So this has created a lot of legal claims on the U.S. government. And
09:50I
09:51mean, frankly speaking, I wouldn't bet a lot of money on trying to get back some of these tariffs. I
09:57think these tariffs that have been paid, they are basically have been paid and it will take years and
10:04years to get things back. The most important thing is to get really some stability, forward-looking
10:10stability into this trade relation with the U.S., which is very important for European exporters. But
10:16it's also very important, of course, for U.S. consumers. And at the end of the day, the U.S.
10:22trade
10:22policy has to return to some stability. Otherwise, it's bad for the U.S. economy and it's bad for the
10:29world
10:29economy. Okay. We'll have to leave it there. Guntram Wolf, a senior fellow at Bruegel. Thanks
10:34so much for joining us here on France 24. Thank you.
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