00:00Well, let's talk a little bit more about some of those concerns that we'll mention there with Vicky Price, who's
00:04an international economist.
00:06Always great to have you on Global Business, Vicky.
00:09Is this really a trade deal or a managed truce between the EU and the US?
00:15It definitely leaves the EU in a worse position vis-à-vis the US, because if you remember where we
00:22used to be,
00:23the US had a tariff of about 2.5% on average on EU goods,
00:28and the EU had a tariff of 10%.
00:30So it was actually in a better position all that time ago,
00:34which is before the reciprocal tariffs, which President Trump announced in April of last year, if you remember.
00:42So, yes, there is an improvement now to where we move to in between.
00:47So a lot has happened during that period.
00:50And the truth is that it is a deal of sorts,
00:53because it reduces the high tariffs which have been introduced from April onwards.
00:59They had come down a little bit, but it is worth bearing in mind that there are still tariffs,
01:04and that's why this deal is perhaps a bit of an improvement, because it goes down to just 15%.
01:09There are still higher tariffs on steel and aluminium imported into the US.
01:15Actually, on some counts, if you look at contents of those things, about 50%.
01:19There are still tariffs on cars and trucks imported into the US, which are higher than the 15%,
01:25so they're about 25%.
01:27So if you look at those tariffs, this is why you could argue that this is an improvement,
01:33because there is now almost an obligation by the US to reduce those to the just 15%,
01:40which was supposed to have been what was agreed about a year ago in Scotland.
01:44So has free trade between the US and Europe effectively ended?
01:51Yes, it's not free trade.
01:53This is a sort of trade deal, if you want to call it that, in inverted commas,
01:57which is giving the ability to the US to impose tariffs at 15%
02:05when the EU is going to be imposing tariffs on industrial products and some agricultural goods at 0%.
02:12So it is an agreement, if you like, to not make things worse,
02:17but at least what the EU has now done, and this is what you were talking about before
02:21with the correspondent from Brussels, is that at least we have some guardrails, some safeguards.
02:28The MEP's parliament have insisted that there should be a look at what happens between now and the end of
02:35this year.
02:36And if some of those tariffs that I mentioned before, which are considerably higher than 15%,
02:40do not come down to the 15%, they can revoke that deal, in inverted commas, that has just been agreed.
02:46So can the EU really trust the United States to stick to this deal, you know, given how politically fragile
02:54it is?
02:55You know, the US isn't happy about the EU digital regulation.
02:59I mean, could we have more surprise tariffs?
03:02Well, yes, you mentioned before the tariffs that President Trump says he might impose 100% on French wines
03:09because they have this digital sales tax, which they're imposing a 3%.
03:15But, yes, things could move.
03:18But we've got to bear in mind that at the same time, President Trump does want,
03:22with a look at what is going to perhaps be happening in November when we have the mid-term elections,
03:28he wants to see the economy moving again.
03:30And there is no doubt that even on the tariff front, a lot of pressure has been put on President
03:35Trump to ease that
03:36because, of course, costs are going up for companies that are importing things into the US
03:40and they have to pass them on to consumers.
03:43He doesn't want high inflation and he doesn't actually want also to be politically disadvantaged, if you like,
03:51by those tariffs hurting consumers.
03:55And I think that's what he's looking at.
03:57If he wants to see lower interest rates, we're not going to have lower interest rates unless you have also
04:01lower inflation.
04:02So everything that adds to the cost in the US coming from tariffs is bad for him.
04:07So in many ways, you could argue that perhaps between now and the end of the year, certainly until November,
04:12we might see the willingness to abide by these rules.
04:17But one has to then watch what may happen afterwards.
04:19So let's...
04:19So
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