EU Defends Trade Relationship as Balanced, Says VAT Not a Tariff
The European Commission knocked down reporting that it is ready to drop its 10% tariffs on autos, and defended the pattern of trade between the EU and the U.S. in a FAQ document on the concept of reciprocal tariffs.
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In answer to its question, "Has the EU offered to lower certain tariffs, like car tariffs, for the US?" it said:
"The EU is ready to find mutually beneficial solutions with the US on tariffs. No specific offer on reducing tariffs has been made by either side. Any tariff reductions must be mutually beneficial and negotiated within a fair and rules-based framework."
The commission added that the U.S. has a 25% tariff on pick-up trucks, which are one-third of auto sales, higher than the 10% tariff on autos in the EU.
"The EU remains open to balanced negotiations that foster a level playing field for both sides." the Q&A says.
The FAQ document said the trade deficit in goods ignores that the U.S. exports more services to the EU than vice versa. The EU government says, "When goods and services are taken into account, the EU has a small surplus with the US of €48 billion; this is the equivalent of just 3% of total EU-US trade."
It also defended the value-added tax, noting it's similar to U.S. sales taxes. "Any company selling goods for consumption in the EU -- whether foreign or domestic -- must pay VAT. EU produced goods pay exactly the same VAT as any imported goods. VAT is not a trade measure, let alone a tariff," it says.
The EU says there's not one right number for average tariffs in EU-U.S. trade, and chose to use the tariffs of goods that are traded (of course, the highest tariffs prevent trade, such as the 25% tariff on trucks). It says that "in practice," the average tariff is about 1%.
In 2023, the U.S. collected approximately €7 billion of tariffs on EU exports, and the EU collected approximately €3 billion on U.S. exports, the FAQ says.