U.S. Threatens Retaliation over EU Carbon Tax Plan

Date: February 4, 2020

US Commerce Secretary Wilbur Ross told Financial Times that the U.S. will “react” to the EU’s carbon tax proposal depending on what it ends up becoming.

“Depending on what form the carbon tax takes, we will react to it - but if it is in its essence protectionist, like the digital taxes, we will react,” he told the publication in an article posted Jan. 26.

Ursula von der Leyen, president of the European Commission, said during her trip in Davos last week that the EU plans to strike a limited trade deal with the U.S. sometime this year. Issues like agriculture, technology and energy standards could be settled fairly quickly. But tensions remain between the two powers over both trade and environmental policies. The U.S. withdrew from the Paris Agreement on June 1, which aims to tackle the issue of climate change. The Trump administration also threatened to impose Section 232 tariffs on the EU’s automotive industry with the argument that passenger vehicles and automotive parts trade could pose a threat to national security, but the administration took no action on the matter before the Nov. 14 deadline.

The EU is a critical trading partner for the U.S. and, particularly, for vehicle parts manufacturers. Whatever form of retaliation the U.S. decides to take could negatively impact vehicle parts suppliers, the largest sector of manufacturing jobs in the United States. For more information on EU trade please contact Ann Wilson or Leigh Merino.

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