EU Sees Progress Toward US Trade Deal With 15% Tariffs
The European Union and the US are progressing toward an agreement that would set a 15% tariff for most imports, according to diplomats briefed on the negotiations.
Member states could be ready to accept duties at that level and EU officials are pushing to have them cover sectors including cars, the diplomats said. Steel and aluminum imports above a certain quota would face a higher tariff of 50%, one of the diplomats added.
The diplomats cautioned that while EU negotiators are optimistic that a deal can be reached, they are also aware that any agreement will need sign off from US President Donald Trump and his ultimate decision is difficult to predict. Negotiations remain fluid and a deal may not be announced imminently, a US official said.
Both sides have accelerated talks over the past weeks to avoid a full-blown trade war sparked by Trump’s barrage of tariffs against partners across the world. EU and US negotiators were nearing an agreement two weeks ago, but the negotiations stalled after the US president threatened Brussels with a 30% tariff on most goods if both sides fail to reach an agreement by Aug. 1.
Alongside a universal levy, Trump has hit cars and auto parts with a 25% customs tax, and steel and aluminum with double that. He’s also threatened to target pharmaceuticals and semiconductors with new duties as early as next month, and recently announced a 50% duty on copper.
Should there be no deal by that deadline, and if Trump were to follow through with his threat to raise levies to 30%, the EU is preparing countermeasures.
The EU response would include a package of tariffs on more than €90 billion ($106 billion) worth of American goods, with rates matching Trump’s 30%. The list would include industrial goods such as Boeing Co. aircraft, US-made cars and bourbon whiskey. The bloc is also discussing activating its anti-coercion instrument, a tool that gives officials wide-ranging powers to restrict US companies’ access to European markets.
The European Commission, the EU’s executive arm, would expect to get the qualified majority of member states that it would require to trigger the ACI, the people said.
The ACI is the EU’s most potent trade tool and a growing number of member states are pushing for its use if a deal isn’t reached. The instrument is primarily designed as a deterrent with its activation requiring a qualified majority of member states to support the move. The ACI would enable the EU to launch a broad range of retaliatory actions, including new taxes on US tech giants, targeted curbs on US investments, and limiting access to the EU market.
Still, the overwhelming preference among capitals and officials is to keep negotiations with Washington on track in a bid for an outcome to the impasse ahead of next month’s deadline.
“We are hearing at this very moment that decisions may be forthcoming,” German Chancellor Friedrich Merz told reporters in Berlin ahead of bilateral talks with French President Emmanuel Macron. “We are meeting at a time that could not have been better.”
The 15% tariff baseline under discussion would include the most favored nation rate, currently averaging 4.8% for EU-US trade, which would then represent an additional 10% compared with the current situation. The EU wants the same rate to be applied also to sectors like pharmaceutical products or chips, one of the people said.
“That would be a huge increase, but the macroeconomic impact for the euro-zone as a whole would be limited,” Andrew Kenningham, chief Europe economist at Capital Economics, said in a research note, suggesting it would shave about 0.3% off EU output.
The EU’s 15% rate could have limited exemptions linked to aviation, some medical devices and generic medicines, several spirits, and a specific set of manufacturing equipment that the US needs, Bloomberg previously reported.
Trump announced a tariff deal with Japan on Tuesday that featured across-the-board 15% duties on imports — lower than the 25% level threatened. That also means that the tariff on Japanese autos is lower than the current 25% rate on major car exporters including the EU.
Some details of the negotiations were first reported by the Financial Times.
— With assistance from Jennifer A Dlouhy, Mark Schroers, Michael Nienaber, Samy Adghirni, and Arne Delfs
