U.S. President Donald Trump issued a warning that Europe would be subjected to a punitive trade tariff if it attempted to welch on its promise to invest in the American economy.
The European Union will “pay tariffs of 35 per cent” if it breaks the conditions of the massive Europe-U.S. trade deal agreed last month, President Trump said. The warning, which was solicited by a question about what safeguards are built into his trade deal with the European Union from CNBC in their interview with the President on Tuesday morning, also saw Trump lay out some of the basics of the agreement.
President Trump said: “They bought down their tariffs. They paid $600bn, and because of that, I reduced their tariffs from thirty per cent down to fifteen per cent”. The White House fact sheet on the EU deal published last month explained that the $600 billion is “new investment” which will come over the remainder of Trump’s second term in office and is “in addition to the over $100 billion EU companies already invest in the United States every year.”
The EU’s tariff rate at 15 per cent is comparatively generous, and President Trump emphasised that it was because the EU had agreed to make that investment. But no investment would mean no deal, and a special punishment rate of 35 per cent on EU exports.
The President said of the $600bn investment: “That’s a gift, that’s not like, you know, a loan… there’s nothing to pay back. They gave us $600bn that we can invest in anything we want… they’ve been, you know, ripping us for so many years that it’s time that they pay up and they have to pay up. They have to pay up. We couldn’t afford to have the deficit.”
President Trump compared the deal the EU made with their neutral neighbour, Switzerland, which he said had recently tried to negotiate a super-low one per cent tariff rate, far below even the ‘friends and family’ discount rate achieved by the United Kingdom in its deal earlier this year. Trump said of the Swiss: ” I did something with Switzerland the other day, I spoke to their Prime Minister, the woman was nice, but she didn’t want to listen.”
“They paid essentially no tariffs. And I said, ‘We have a $41bn deficit with you, madam — I didn’t know her — and you want to pay one per cent tariffs?’ She wanted one per cent! I said you’re not going to pay one per cent.”
Instead, Switzerland was slapped with a 39 per cent punishment rate tariff after the negotiating deadline passed last week. This has left the country “reeling”, Reuters reported, and its stock market plunging.
Swiss President Karin Keller-Sutter faced stiff criticism domestically for having botched the phone call with Trump that failed to secure the country a preferential rate. In a bid to reverse the situation, Keller-Sutter and her economics minister, Guy Parmelin, took the extraordinary step on Tuesday of flying to the United States for talks with Trump, despite not having a public invitation or any confirmed diary appointment with the President to attend.
The Swiss Federal government said in a statement today, as Keller-Sutter departed Europe for Washington, that she would be there “to facilitate meetings with the US authorities at short notice”. The meetings would bring “a more attractive offer” to Trump that would be taking “U.S. concerns into account”.
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