Europe is in the midst of a tariff battle, reportedly aiming to avert crippling 50% tariffs from the US by accepting a 10% tariff as part of a high-level “framework” deal. This agreement, nearing completion, aims to meet President Donald Trump’s self-imposed deadline next Wednesday. The EU’s acceptance of the 10% tariffs is conditional on an extension for broader negotiations and potential concessions on the contentious 25% car tariff, a major concern for the German auto industry.
Optimistic signals emerged from Thursday’s meeting between US Treasury Secretary Scott Bessent and EU Trade Chief Maroš Šefčovič. Bessent, noting the eve of July 4th celebrations, expressed the US’s desire for “a lot more trade deals.” The intensity of these high-level discussions will continue with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, with expectations for “diligent” work throughout the weekend.
The urgency stems from President Donald Trump’s ultimatum: 50% tariffs on all EU goods by July 9th unless a deal is struck. This would represent a significant escalation from current tariffs, which include 10% on most EU products and 25% on cars. German Chancellor Friedrich Merz has consistently advocated for a quick, “UK-style” agreement in principle, emphasizing that a swift resolution to the tariff dispute is more important than a minutely detailed trade deal.
The EU is seeking a “standstill clause” in any extended negotiations to prevent new tariffs. While some believe a deal could be reached as early as Friday, offering Trump a celebratory announcement on Independence Day, complexities persist. Past discussions revealed extensive US “grievances,” and the latest US proposal reportedly lacks specifics on American concessions, particularly concerning the EU’s “red lines” on strategic sectors like pharmaceuticals and semiconductors, economic purchases, and non-trade barriers.