US-EU trade deal: It’s ‘hard to predict’, outlook is ‘gloomy’

BRUSSELS: European Union negotiators have failed so far to achieve a breakthrough in trade negotiations with the Trump administration and may now seek to extend the status quo to avoid tariff hikes, six EU diplomats briefed on the talks said on Friday.

The EU had already dropped hopes of locking in a comprehensive trade agreement ahead of Trump’s July 9 deadline, but following talks in Washington, it was not clear if it would even secure a lighter agreement in principle.

The Commission told EU envoys on Friday afternoon that it believed the United States was willing to “pause” the current tariffs in place for partners with which it reached an initial agreement, with possible tariff relief later.

TRUMP TARIFFS

Without a preliminary agreement, broad US tariffs on most imports would rise from their current 10 per cent to the rate set out by President Donald Trump on April 2. In the EU’s case that would be 20 per cent.

The Commission said that at one point the United States had mooted a 17 per cent tariff on EU agri-food imports, the sources said.

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Two of the EU diplomats who spoke to Reuters said the Commission appeared to be pushing more for the first option, to extend the status quo, and then seek to negotiate further.

US Treasury Secretary Scott Bessent said on Thursday that negotiations were set to continue into the weekend.

“Progress was made towards an agreement in principle during the latest round of negotiations which took place this week,” a European Commission spokesperson said.

“Having discussed the state of play with our member states, the Commission will now re-engage with the US on substance over the weekend.”

COUNTERMEASURES

The EU currently faces 50 per cent tariffs on steel and aluminium exports to the United States, 25 per cent tariffs on cars and car parts and a 10 per cent levy on most other products.

The EU has agreed a package of 21 billion euros ($25 billion) of countermeasures, but it has not put them in place.

The bloc is also looking into a second package, originally envisaged at 95 billion euros. That has now been whittled down to 72 billion euros after lobbying from various EU members, two of the diplomats said.

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The EU negotiators had left for Washington accepting they might not persuade the United States to lower its baseline tariff below 10 per cent, but seeking immediate relief from tariffs in key sectors such as aircraft and aircraft parts, as well as reduced rates for cars and metals.

A third source described the situation after the talks as “still very much in flux and hard to predict”. Another described the outlook as “gloomy”.