In another area of President Donald Trump’s ongoing trade war, the European Union (E.U.) is hopeful that a comprehensive trade deal can be reached with the U.S. by Trump’s self-imposed August 1st deadline to implement trade deals or face tariffs.
As of August 1st, if a trade deal is not reached, Trump has threatened across-the-board tariffs of as high as 30% on E.U. imports. Reports suggest the U.S., through its trade negotiators, have offered a blanket 15% tariff across-the-board. This has made European officials hopeful that the worst of the tariffs can be avoided.
What U.S. and E.U. officials think
For his part, U.S. Treasury Secretary Scott Bessent, who is intimately involved in the trade negotiations, feels that significant progress has been made. President Trump has demanded that the E.U. must “agree to open up the European Union to American businesses”.
Across the Atlantic Ocean, European Central Bank President Christine Lagarde was quoted as saying “the sooner this trade uncertainty is resolved…the less uncertainty we will have to deal with.” Additionally, Lagarde was pushing the need to finalize transatlantic trade deals in the very near future, in an effort to reduce uncertainty on the economy. E.U. interest rates were left unchanged at 2% yesterday, in another hopeful sign for a trade deal.
What the U.S. wants out of a U.S.-E.U. trade deal
For most of the E.U.’s existence, U.S.-E.U. trade relations were thought to be fair to both parties. However, Trump threatened tariffs in his first term and has now upped the ante in his second term. Trump wants a more level playing field and fair trade terms with the E.U., who he sees as “taking advantage” due to what he says are terms too favorable to European governments.
What the E.U. wants out of a U.S.-E.U. trade deal
The E.U. wishes to reach a trade deal that works for Trump and for the E.U., seeking to put the tariff issue to bed for good. The E.U. wants 10% tariffs, rather than the proposed 15% level. Leading French businessman commented on the need for the E.U. to reach a deal similar to the one reached between the U.S. and Japan recently. Many Europeans know they cannot afford, and are unlikely to win, a trade war with the Trump administration, so they are being conciliatory in the trade talks. For example, the E.U. recently did not retaliate when Trump announced higher tariffs, seeking talks instead.
Furthermore, the E.U. has said it will not hesitate to retaliate if the U.S. goes through with higher tariffs if a trade deal is not reached. European Commission spokesman Olof Gill mentioned “countermeasures” that would be established as early as August 7th, if a deal is not reached. Things that would be subject to retaliatory action would be liquor, wine, automobiles, airplane engines, and other industries, of which the E.U. is a major exporter to the U.S.
