A controversial investment pledge forming part of the EU-US trade deal will need to be honoured by the EU or 35% blanket tariffs will be applied to the bloc, US President Donald Trump has warned.
On Tuesday President Trump was quizzed on the deal he agreed by handshake with Commission President Ursula von der Leyen in Scotland on 27 July on CNBC’s ‘Squawk Box’ via phone.
He touted the US position – which a White House fact sheet stated – that the agreement included a pledge for the EU to invest $600 billion in the US by the end of his second term.
“This new investment is in addition to the over $100 billion (that) EU companies already invest in the United States every year,” the fact sheet stated following the deal.
The European Commission is unable to design and implement investments on behalf of the private sector. The $600 billion has been described by the Commission as an indication based on the executive’s contacts with industry.
“It’s not something the EU, as a public authority, can guarantee – it’s something based on the intention of private companies,” a senior official said last week.
Asked on Squawk Box what teeth there were in the investment pledge element of the deal, Trump said, if it didn’t happen, “then they pay tariffs of 35%”.
Trump said that the investment pledge was one of the reasons he had dropped tariffs to a blanket 15% rate, so if it is unfulfilled then higher tariffs will click back in.
The EU has been approached for comment.
The Commission on Tuesday suspended a package of trade countermeasures targeting €93 billions’ worth of American goods which was scheduled to take effect on 7 August, as it continues to negotiate a joint statement formalising the agreement struck by von der Leyen and Trump in Scotland.
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