Eager to avoid a looming 20% tariff on its trans-Atlantic exports, the European Union has agreed to “intensify” trade talks with the United States after being accused of moving too slowly. EU Trade Commissioner Maros Sefcovic gave the update Thursday before a meeting of EU trade ministers in Brussels, adding that he and his US counterpart Howard Lutnick were due to meet “very soon.”
The EU summit was expected to solidify the bloc’s position in negotiations to avoid the additional levies that kick in from July, after US President Donald Trump sealed his first deals since announcing so-called reciprocal tariffs on most global imports last month.
Following a tense standoff, Washington and Beijing reached a temporary deal last week, slashing punitive tariffs from over 100% to more sustainable levels. As negotiations for a long-term deal intensify, for the next 90 days Chinese goods entering the US will incur a 30% tariff, while exports from the US to China will face a 10% levy.
Days earlier, Trump secured the first outline of a trade deal since proclaiming April 2 as “Liberation Day,” when he announced stiff worldwide tariffs. The broad pact with the United Kingdom reduces tariffs on British carmakers exporting to the US and grants American exporters, including farmers and ethanol producers, enhanced access to the UK market.
Trump under pressure to secure EU deal
While Trump continues to play hardball with Brussels, claiming earlier this week that the “European Union is in many ways nastier than China,” Andrew Kenningham, chief Europe economist for the London-based Capital Economics research house, thinks economic pressures will prevent him from pushing Brussels too far.
“The two new deals will make EU negotiators more confident that they can stick broadly to the policy already set out, which is to try to avoid escalation, threaten some retaliation but with a delay, while at the same time be willing to negotiate,” Kenningham told DW.
Even so, Capital Economics warned in a research note this week that an EU-US deal “appears harder to reach,” pointing to the bloc’s large goods trade surplus with the US and the challenge of reaching consensus among the 27 EU member states.
The EU has already threatened new tariffs on €95 billion ($107 billion) of US goods in response to Trump’s earlier tariffs on aluminum, steel and European automakers, but paused them to allow negotiations to proceed. Brussels is also considering curbs on scrap steel and chemical exports to the US.
Trump vague on demands from EU
Claudia Schmucker, head of the Center for Geopolitics, Geoeconomics, and Technology at the German Council on Foreign Relations, doesn’t think the China and UK deals really “change anything.”
“Trump is still expecting that the EU will offer something he feels is valuable enough,” Schmucker told DW, adding that the president’s demands from Europe remain a “mystery,” but are likely to include more agriculture and energy imports.
The EU has so far offered to boost imports of US liqueified natural gas, advanced AI technology and soybeans, while proposing zero-for-zero tariffs on all industrial goods. Brussels has, however, ruled out lowering other US irritants — from sales tax (VAT) and regulations, which Trump perceives as giving the bloc an unfair advantage in trade.
Last year, the US had a $235.6 billion (€210 billion) trade deficit in goods with the EU, a 12.9% increase on the previous year, according to the Office of the US Trade Representative. The latest 2023 data from Eurostat, the EU’s statistics agency, puts the EU goods surplus at €157 billion.
Schmucker thinks the president’s negative rhetoric, which included an unfounded claim that the EU was created to “rip off” the US, plays into Brussels’ hands as EU states try to reach consensus on how to proceed, even as Hungary, Italy and some others push for bilateral deals.
“Even though some EU states are not fully on board with Brussels’ negotiating position, Trump’s antagonism is enough to help boost EU unity,” she said.
Ahead of Thursday’s talks in Brussels, Swedish Trade Minister Benjamin Dousa was doubtful about a speedy US-EU deal, saying he didn’t think it was likely in the “coming weeks.” If Trump keeps the baseline 10% tariff imposed on all imports as announced last month, as it did for the UK, Dousa said: “The US can expect countermeasures from us.”
EU: A key market for US services exports
Miguel Otero, senior fellow for international political economy at Spain’s Elcano Royal Institute, believes the US “has a lot to lose” from any Trump misstep.
“The EU has a big deficit when it comes to services, especially financial and digital services and entertainment platforms,” Otero told DW. “The US cannot afford to lose the European market. If we act as a single entity, then the EU has as much leverage as China.”
Although the EU has a significant goods surplus with the US, with a fifth of EU goods crossing the Atlantic last year, the bloc also accounts for 25% of US services exports, worth $275 billion in 2024. Including Switzerland and the UK, 42% of US services exports are sent to the European market.
The European Commission, the bloc’s executive arm, vowed this week to launch a dispute at the World Trade Organization against Trump’s “reciprocal” tariffs and levies on cars and auto parts.
Source : https://www.dw.com/en/can-eu-secure-swift-trade-pact-with-trump-like-china-uk/a-72543513
