US Wields Tariff Stick: von der Leyen Says EU Forced to Seek Trade Diversification

European Commission President Ursula von der Leyen stated on September 18 local time that the EU must seek trade agreements with countries like India to reduce its dependence on the United States, as U.S. tariff hikes are forcing the EU to pursue trade diversification.

Von der Leyen mentioned that the EU hopes to reach an agreement with India within this year. She also noted that the EU is engaged in related negotiations with South Africa, Malaysia, the UAE, and other countries.

On August 21 local time, the United States and the EU issued a joint statement announcing that they had reached an agreement on the framework of a trade deal. The U.S. reiterated in the statement a 15% tariff cap on most EU goods, covering automobiles, pharmaceuticals, semiconductor chips, timber, and more. The EU committed to eliminating tariffs on U.S.-made industrial products and providing preferential market access for U.S. seafood and agricultural products. The EU also plans to purchase $750 billion worth of U.S. liquefied natural gas, oil, and nuclear energy products by 2028, along with an additional $40 billion in U.S. AI chips, while significantly increasing procurement of U.S. military and defense equipment. EU companies will also add $600 billion in investments in U.S. strategic industries.

Carsten Brzeski, Head of Macro Research at ING, pointed out that there are numerous potential friction points in this agreement between the EU and the U.S., which could lead to escalated tensions in the future. Moreover, the supervision and implementation methods for many "intentional" aspects remain unclear. More alarmingly, this agreement highlights the EU's deepening dependence on the United States, making it less of a "deal" and more of a "loss control document" for the EU.