US and EU agree on a limited trade deal to de-escalate trade tensions

The European Union and the United States have announced a limited trade deal as the first step in efforts to reduce trade tensions that have persisted for several years.

The US Trade Representative Robert Lighthizer and EU Trade Commissioner Phil Hogan said that there were many trade animosities between the two countries. They stated that, the package to reduce tariffs was to mark the beginning of a process that would lead to more free, equitable and reciprocal transatlantic trade.

“We see this as a first step in de-escalation of ongoing EU-US disagreements,” said an EU source.

Transatlantic trade tensions began in 2017 when President Donald Trump, cut tariffs on steel and aluminum exports from Europe and other partners. Then things got worse and there were decades of battle over subsidies for Airbus and Boeing. Later this battle led to tit-for-tat tariff exchanges.

European nations’ drive to impose a digital tax on US tech giants has also drawn the risk of duties on EU products including French wine.

The deal announced on Friday is very limited in scope and would mainly apply to US lobster exports.

EU tariffs on US lobster were eight per cent, and exports to the EU in 2017 amounted to approximately $111 million. In return, the EU will see tariffs lowered by half on a variety of items like certain packaged meals, crystal glass, as well as cigarette lighters worth an annual trade value of $160 million.

Trump has placed heavy pressure to secure the zero-tariff lobster contract after the EU entered into a trade agreement with Canada. A request by the US for a deal on lobsters had been rejected by the EU last year.