(Bloomberg) – The President of the European Commission, Ursula von der Leyen, announced that the European Union will extend until August 1 the suspension of retaliatory trade measures against the United States, to allow negotiations to continue. The decision comes after former President Donald Trump threatens to impose a 30% new rate on European bloc products.
These measures, adopted by the EU in response to Trump’s tariffs on steel and aluminum, were suspended to make conversations viable, but should be automatically resumed at midnight on Tuesday.
“At the same time, we will continue to prepare new retaliatory measures to be completely ready,” Von Der Leyen told Journalists in Brussels on Sunday, reinforcing the EU’s preference for a “negotiated solution.”
The current list of measures would affect about 21 billion euros ($ 24.5 billion) in American products, while the EU has another list ready, about 72 billion euros.
Von der Leyen also stated that the EU anti-coercion instrument, the block’s most powerful commercial tool, will not be used right now. “ACI was created for extraordinary situations,” she said. “We haven’t reached this point yet.”
Trump has sent letters to business partners, adjusting the tariff levels proposed since April and inviting them to new negotiations. In a letter released on Saturday, the US President warned that the EU would face a 30% rate next month, if not negotiated better terms.
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Read more: Trump says US will impose 30% rates on EU and Mexico next month
The EU sought to close a provisional deal with the US to avoid higher rates, but Trump’s letter shook recent optimism in Brussels about the possibility of a last -minute agreement among the big economies. Block ambassadors should meet this Sunday to discuss the commercial situation.
The extension of the suspension of retaliatory measures must be approved by member countries.
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Cars and agricultural tariffs have emerged as the main impasse points between the European Union and the US, while both parties work for a provisional trade agreement in the coming days, Bloomberg said.
The EU wants the rate on agricultural exports not to exceed 10%. A compensation mechanism, defended by some automakers as a way of granting tariff relief in exchange for investments in the US, is not currently being considered due to EU concerns that this can move production to the other side of the Atlantic.
Block negotiators are concentrating conversations on car tariffs, according to people familiar with the subject, who spoke on condition of anonymity to discuss private deliberations.
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