Politico: EU tariffs could be as high as 20-25%

Politico is reporting that the European Union is likely to face a flat, double-digit tariff on all goods exported to the U.S. as part of “reciprocal tariffs” expected to be formally announced by former President Donald Trump on April 2 and take effect at midnight on April 3. This is according to European diplomats.

The proposed tariff rate is still under discussion, but could be as high as 20–25%, and would be additive—coming on top of existing tariffs on specific industries such as steel, aluminum, and countries purchasing oil and gas from Venezuela (including Spain and the Netherlands). That is higher than earlier reports which pegged the number at 20%.

Trump’s tariff package is expected to target five industries:

• Steel and aluminum (already in effect)

• Automobiles (announcement expected Wednesday)

• Lumber, semiconductors, and pharmaceuticals (possible later in April)

EU diplomats say there’s little they can do to avoid the tariffs, which the Trump administration views as the starting point of broader trade negotiations. The tariff calculations are said to reflect trade barriers the EU imposes on U.S. exports, including both tariffs and non-tariff barriers.

Trump has ramped up criticism of the EU, calling its trade practices unfair and even questioning the legitimacy of the bloc’s value-added tax system (although this is apparently not being considered anymore).

As per Trump, the US has been abused for decades. He wants his pound of flesh.

The EURUSD is trading to new lows at 1.0750. The 200 day MA is at 1.0730.

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This article was written by Greg Michalowski at www.forexlive.com.