The European Union has warned that its trade with the United States could be effectively wiped out if Washington makes good on its threat to slap a 30% tariff on goods imported from the bloc.
A tariff of “30%, or anything above 30%… has more or less the same effect. So, practically it prohibits the trade,” Maroš Šefčovič, the EU’s trade commissioner, said as he arrived ahead of an EU ministerial meeting in Brussels on Monday.
Šefčovič said it will “be almost impossible” for the bloc to continue its current level of trade with America if that new tariff rate is implemented on August 1 – the date stipulated by US President Donald Trump in his letter to the EU on Saturday.
Such an exemption would be moot: The tariff income goes to the US federal budget, and in this case, the extra costs caused by the import tariffs are paid from the US federal budget. It’s ±0 all the same with the import tariffs. However, there will also be import tariffs in the other direction, and those need to be paid to EU. Anything that needs to be brought from USA to EU in order to be processed there into an F35 component causes extra money to go to EU.
he US federal budget doesn’t really win or lose anything through the import tariffs alone, but the opposing import tariffs go to foreign countries in the EU and there’s no reason why the US federal administration would exempt from those tariffs.
Of course, when EU countries are buying F35 planes, it matters more: There the components being brought from EU to USA are subject to import tariffs paid to the US federal budget, and are money lost from the perspective of EU. But at the same time, how is the price of the F35 agreed upon? If the price is already fixed, then Lockheed Martin has to pay the EU import tariffs from its own pockets and might get the US import tariffs compensated as federal subsidies. But, if the agreements say that the variance in prices are covered by the buyer, then the US import tariffs actually benefit the US.