The European Union has proposed a "zero-for-zero" tariff deal to the Trump administration following the recent implementation of a 20% import tax on certain goods by the United States. European Commission President Ursula von der Leyen announced this offer during a press conference with Norwegian Prime Minister Jonas Gahr Støre. She emphasized that Europe is always open to making beneficial agreements and is prepared to negotiate with the U.S.
The proposed arrangement would eliminate tariffs on industrial goods, including chemicals, pharmaceuticals, rubber, plastic machinery, and cars. However, European officials have not dismissed the possibility of retaliating against the U.S.’s previous 25% tariffs on steel and aluminum.
The backdrop to these negotiations is a significant drop in global stock markets following President Trump’s announcement of a baseline global tariff of 10% and additional import taxes effective April 9. This has caused considerable concern among investors. The EU’s average tariff on agricultural products from countries other than the U.S. is about 1.6%, while American cars face a 10% duty.
On April 6, Trump also announced a 25% tariff on all foreign-made cars entering the U.S., further escalating trade tensions. The situation has led to a 6% drop in the pan-continental STOXX Europe 600 index, although it recovered somewhat to close down 2.9% after von der Leyen’s comments.
Elon Musk, the CEO of Tesla and SpaceX, expressed optimism over the potential for a zero-tariff situation between the U.S. and Europe, suggesting it could lead to a free-trade zone between the two regions. This idea had been close to realization during President Obama’s second term but fell apart due to various issues, including differing regulations on food production.
As discussions continue, the focus remains on finding a resolution that can ease trade tensions and stabilize markets.