EU capitulates on Trump's imposed 10% duties
US-EU Trade Negotiations Remain Tense Amid Escalating Tariff Dispute
EU trade negotiators have conceded that they are unlikely to overturn President Donald Trump's "reciprocal" tariffs, as deeper concessions may be necessary to avert a full-blown trade war. Despite optimism in markets over progress in US-EU talks, senior EU officials have privately expressed pessimism about the negotiations, which could result in the bloc accepting increased US duties for an extended period.
The European Commission has informed EU member states that Trump's 10% "reciprocal" tariff on almost all goods is likely to persist, according to officials and diplomats. Negotiators, however, continue to hope for a reduction in the rate. This assessment marks a change in Brussels' approach to the talks, which had previously differed from the UK's stance of refusing to offer unilateral concessions to limit duties to a 10% baseline.
As the markets fail to temper Trump's tough trade policy as much as Brussels had anticipated, the EU is left with an unpalatable choice between making concessions or retaliation, according to officials and diplomats. Following a call with European Commission President Ursula von der Leyen, Trump postponed his threat to impose 50% levies from June 1 to July 9.
Trump has already imposed a 10% additional tariff on most US trading partners, impacting about 70% of EU exports, or €380bn. The US maintains that this 10% rate is not part of trade negotiations. Despite Trump's willingness to delay the most punitive tariffs, Björn Seibert, Chief of Staff to von der Leyen, presented a somber assessment of the negotiations to EU ambassadors.
In light of the US position, Seibert proposed a potential deal, which includes elements similar to the one concluded by the UK, such as lower-tariff or tariff-free quotas for sensitive exports like cars, which are subject to 25% duties imposed on national security grounds. Trump has threatened to impose the same tariffs on semiconductors, medicines, and other products.
"We have to try to do better than that," said one EU diplomat. However, they acknowledged that more ambitious goals would requiere the bloc to take countermeasures against the US. "Trump doesn't have the slightest interest in a negotiated solution. He wants us to capitulate or face punitive tariffs," said another EU diplomat.
France was the only country to voice opposition to unilateral concessions and the acceptance of a 10% tariff, according to three diplomats. Several member states have held similar positions in the past. As part of its offer to Washington, Brussels will also propose deregulation, widening a recent drive to cut red tape for companies that can be pitched to Trump as a benefit for US business.
Italy's Prime Minister Giorgia Meloni, a vocal opponent of tariffs, plays a pivotal role in the talks, having already spoken to Trump to request a call from von der Leyen over the weekend. Rome continues to advocate for both sides eliminating tariffs on all industrial and some agricultural goods, but ambassadors were told the US was not interested. Instead, the EU could cut some import tariffs unilaterally.
Additional US demands include scrapping digital taxes and value-added tax, as well as changing food standards to allow more American produce. The EU should be prepared to take countermeasures if negotiations fail, as it has paused a €21bn package of up to 50% tariffs on US goods such as maize, wheat, motorcycles, and clothing in response to Trump's steel tariffs. The commission is also consulting member states on a €95bn list of other items, including Boeing aircraft, cars, and bourbon whiskey, which would be hit in response to Trump's "reciprocal" duties.
A majority of member states advocate taking a more uncompromising approach, arguing it's possible to shift Trump. A Eurobarometer poll for the commission found that 80% of EU citizens back retaliation if other countries increased their duties on imports from the bloc in order to defend its interests.
- The EU's negotiations with the US, involving tariffs and trade, are significantly impacted by political factors, as EU officials express pessimism about the progress and potential acceptance of increased US duties for an extended period.
- Amidst war-and-conflicts-like standoffs over tariffs, the EU is considering policy-and-legislation changes, such as deregulation and potential tariff cuts, in a bid to address the tough business policies imposed by the US, with Italy playing a key role in these talks.
- General-news outlets are closely monitoring the US-EU trade disputes, as the EU contemplates countermeasures, such as tariffs on products like Boeing aircraft, cars, and bourbon whiskey, in response to the persisting 10% "reciprocal" tariff from the US, which affects a significant portion of EU exports.
