EU, US Announce Rocky Path Ahead for Follow-up Negotiations... Tariffs by Item & US Investment Uncertain

Disagreements over Trade Deal Details... Target Investment Amount & Energy Imports Also Unclear

Internal Discord Despite 15% Mutual Tariffs... EU Negotiating Team Faces Growing Pressure, Negotiations Could Prolong

EU and US Reach Trade Deal Agreement (Reuters=Yonhap News) U.S. President Donald Trump and EU Commission President Ursula von der Leyen shake hands after announcing a trade deal agreement in Turnberry, Scotland, on the 27th (local time). [Reproduction and database prohibited]  

(Seoul=) Reporter Lee Yu-mi = The European Union (EU) has breathed a sigh of relief by reaching a trade agreement with the United States, which includes a 15% mutual tariff rate, but difficulties are anticipated in follow-up negotiations regarding tariffs by item and investment in the US.

Although both sides announced a trade agreement on the 27th, it is not legally binding, and with disagreements surfacing over the details, there are predictions that future negotiations will take a considerable amount of time.

According to BBC broadcast on the 1st (local time), explanations from both the US and the EU differ on tariffs for key items such as pharmaceuticals, semiconductors, steel, and aluminum.

The US stated that a 15% tariff will apply to European pharmaceuticals and semiconductors, but the EU maintains that a 0% tariff will continue to apply to these items for the time being until new tariff standards are agreed upon.

Regarding pharmaceuticals and semiconductors, while the White House announcement did not mention that 15% would be the maximum, the EU views it as being adjusted within the 15% limit.

Furthermore, the US announced that it will maintain a 50% tariff on steel and aluminum, while the EU stated that this rate will be gradually lowered and a quota system exempting tariffs to a certain level will be introduced in the future.

There are also differences in perspective regarding the EU's investment commitments to the US.

The US announced that the EU would purchase US oil, LNG (liquefied natural gas), and nuclear energy worth $750 billion (approximately 1,036 trillion won), but the EU announced it only has "the intention to do so."

The US announced that the EU would invest $600 billion (approximately 830.7 trillion won) within President Trump's term, but the EU's statement specified only that "companies have expressed interest in investing."

In this regard, the BBC pointed out that it is uncertain whether the target investment amount will be achieved as the EU cannot force private companies to invest in the US.

It is also argued that it is unclear whether the US can supply that much energy, and the EU cannot make purchasing decisions on behalf of the private sector.

Additionally, the US announcement included an agreement for the EU to purchase a significant amount of US military equipment, but this was omitted from the EU's announcement.

Skepticism is also being raised in some European circles that it would be difficult to further expand this, given that nearly 80% of the EU's defense investments are already concentrated on US weapons.

The US plans to apply a 15% tariff to European wine and spirits, but the EU intends to continue negotiations with the US to lower this.

Amidst this, there is considerable discontent within Europe regarding the 15% mutual tariff on most European products, which, while resolving economic uncertainty, represents a significant increase from previous rates.

Although the 15% tariff is a substantial reduction from the 30% initially foreshadowed by US President Donald Trump, it is a significant increase compared to the previous average European tariff of 4.8%.

The impact of the 15% tariff is also expected to vary by country, with some nations predicted to suffer disproportionately.

Germany, Ireland, and Italy are expected to be hit hardest due to their high industrial linkages with the US.

For Germany's automotive industry, where exports to the US account for 13% of total exports, the 15% tariff on automobiles is expected to be a cost burden.

Ireland, which exports approximately $50 billion worth of pharmaceuticals to the US annually, is the most dependent EU country on the US and reluctantly accepted the trade deal.

Italy is also facing projections that its GDP could decrease by 0.2% due to damage to its agricultural, pharmaceutical, and automotive industries.

The BBC reported, "Many details still need to be discussed, so follow-up negotiations are expected to be considerably lengthy," and "Given the backlash after the trade deal's conclusion, the EU negotiating team may feel pressured to adopt a stronger stance." Yonhap News