The European Union is expected to suspend ratification of its trade agreement with the United States in response to newly imposed global tariffs by the Trump administration.
Last Friday, the Supreme Court of the United states (SCOTUS) ruled that Donald Trump’s reciprocal tariffs imposed on several nations last year are unlawful, as they were outside of the executive’s authority.
The US and the European Commission agreed last summer on a 15% import rate on most EU exports to the US, while American industrial goods entering the bloc had tariffs removed.
A 50% tariff on European steel and aluminium imports coming into the US was also maintained.
The ratification of the deal was scheduled for March after a vote by the European Parliament; however, new tensions between the two blocs have deemed it impossible.
It would mark the second halt of the process within a month, after it was first frozen in late January due to the US President’s threats over Greenland.
EU-US Deal Vote
The second (potential) delay was first reported by the Financial Times and later confirmed by Bloomberg, speaking with representatives in the European Parliament.
In a statement issued over the weekend, the European Commission said that “the current situation is not conducive to delivering ‘fair, balanced, and mutually beneficial’ transatlantic trade and investment, as agreed to by both sides. A deal is a deal.”
Although the EU member states have already approved the trade agreement through the Council, it still needs a vote in the European Parliament.
That vote was originally scheduled for this week.
According to Bloomberg, a meeting is now set for later this Monday to review the current status of the deal and decide whether the parliamentary vote will go ahead as planned.
Bernd Lange, part of the Progressive Alliance of Socialists and Democrats (S&D) and the chairman of the Parliament’s Trade Committee, said over the weekend that further progress on the trade agreement should be delayed until the EU receives more clarify on the new tariffs.
He told FT that “it is clear that we have a clear breaking of the Scotland deal. We need clarity and stability, and therefore it could be that we decide tomorrow for a hold.”
The lawmaker condemned the “pure tariff chaos from the US government. No one can make sense of it anymore.”
Additionally, Zeljana Zovko, member of the European People’s Party (EPP) and the party’s lead trade negotiator on the US deal, told the outlet that there is “no other option” but to delay the approval process.
The three major political groups in the European Parliament — EPP, S&D, and the liberal Renew Europe — currently agree on freezing the process.
SCOTUS Ruling
Last Friday’s court ruling, approved by a 6-3 majority, determined that the tariffs imposed by Trump last April are unlawful due to the President’s lack of authority under the 1979 International Emergency Economic Powers Act (IEEPA), on which these duties were based.
The US Constitution gives the power to impose taxes and duties to Congress and not to the executive branch.
The IEEPA mechanism was designed to allow for Presidents to freeze assets and restrict financial transactions in true emergencies. However, the IEEPA has never been used before to justify imposing duties of this matter.
According to the government, tariffs were imposed on the IEEPA statute as it gives the president wider authority to take immediate action after declaring a national emergency — in this case, persistent US trade deficits.
15% Global Tariffs
The President called the justices of the Supreme Court who voted in favor of the ruling “a disgrace to our country.”
Saying that “there are methods, practices, statutes, and authorities, as recognized by the entire court in this terrible decision,” Trump imposed a 10% global tariff on top of existing US levies.
These were based on section 122 of the Trade Act of 1974, which allows the President to set import restrictions temporarily for up to six months.
Over the weekend, the President raised these duties to 15%, the maximum rate allowed under the Act.
He also reaffirmed that the 25% tariff on auto parts and vehicles is not set to change, as the duty was based on Section 232 of the Trade Expansion Act of 1962.
The rates apply to all imports except for parts from Canada and Mexico that comply with the USMCA — although the agreement’s renewal later this year has not been granted — and imports covered by trade deals with the EU, Japan, and South Korea.
With the suspension of the EU-US trade deal ratification, it becomes unclear what rates will apply to auto imports on both sides.
