The House of Lords heard this week that the UK and EU must decide whether to coordinate a response to Donald Trump's proposed tariffs on goods imported into the United States or cut separate deals with the new president. Wolfgang Münchau, co-founder and director at research company Eurointelligence, suggested that both the EU and UK would likely struggle to secure individual trade deals with the US and that a coordinated response could be more effective.
The UK and the EU face a critical decision regarding their response to Donald Trump's proposed tariffs on goods imported into the United States. At a House of Lords hearing this week examining the UK's post-Brexit relationship with Europe, Wolfgang Münchau, co-founder and director at research company Eurointelligence, stated that both the EU and UK would likely struggle to secure individual trade deals with the new US administration.
Münchau suggested that a coordinated response from the EU and UK could prove more effective in addressing the threat posed by Trump's import tariffs, which he asserted would disrupt global trade. The tariffs, typically borne by importers, would likely be passed onto consumers, impacting sales and potentially triggering other economic consequences. Münchau speculated that Trump might leverage tariffs as a bargaining chip in negotiations concerning industry relocation to the US. The President, he noted, appears to be misinformed about the nature of import tariffs and trade surpluses, believing that the US is being unfairly exploited by Europe despite the fact that the EU exports more to the US than it imports. Trump has publicly declared his intention to impose tariffs on the EU, claiming it's the only way to achieve 'fairness'.Speaking to the House of Lords' European Affairs Committee, Münchau expressed skepticism about the feasibility of both the EU and the UK securing individual trade deals with the US, predicting that they would face significant challenges. While acknowledging the UK's efforts to establish a 'reset' in its trading relationship with the EU, Münchau emphasized that Trump's tariffs would likely exert a more profound influence on their future interactions. He highlighted the possibility of the UK and EU coordinating their response to Trump's actions while acknowledging the temptation for each entity to pursue a separate deal with the US President. Münchau concluded that the ramifications of Trump's tariffs would likely have a more significant impact on the UK-EU relationship than the broader issues surrounding the 'reset'. The prospect of US tariffs on the EU, with details yet to be finalized, creates uncertainty for IT organizations. For example, German company SAP, a vital provider of application software for entities like Apple, Walmart, and numerous US government departments, faces potential disruption. Furthermore, any aspirations for closer trade alignment between the EU and the UK would need to reconcile with recent EU legislation, including the AI Act, the Digital Services Act, and the Digital Markets Act. Münchau argued that these legal frameworks, while protective of consumers, are disadvantageous to businesses operating within these markets. He pointed out that the UK's regulatory landscape differs significantly from that of the EU, particularly in the digital sphere, where the UK enjoys a competitive edge.
TRUMP TARIFFS UK-EU RELATIONSHIP INTERNATIONAL TRADE POST-BREXIT DOMESTIC POLICY
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