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European Union

EU Leaders Scramble to Reach Trade Deal with US, Avoid Swingeing Tariffs

Strategic Insights

— 2 min read

EU leaders are gathering in Brussels on Thursday to discuss the next steps in reaching a trade deal with the US, with time running out before swingeing tariffs kick in on a majority of goods exported to the US. The European Commission has been in talks with Washington for weeks, and will update leaders on the state of play at Thursday's summit. German Chancellor Friedrich Merz has signalled that negotiators should close a deal as soon as possible, even if it means an unbalanced outcome with the Europeans agreeing to some level of US tariffs.

Key Takeaways:

  • The European Union has until July 9 to reach a trade deal with the US or face swingeing tariffs on a majority of goods exported to the US.
  • The EU has put a zero-percent tariff proposal on the table, but it's widely seen as a non-starter in talks with Washington.
  • EU leaders are discussing a "Swiss cheese" agreement, which would have a general US levy on European imports but enough loopholes to shield key sectors such as steel, automobiles, pharmaceuticals, and aeronautics.
  • If no agreement is reached, the default tariff on EU imports is expected to double to 20 percent or even higher, from the current 10 percent on a majority of EU products.
  • The EU has consistently sought to negotiate with the US, threatening retaliation only if no agreement is reached, unlike Canada and China which have hit back swiftly at Trump's tariff hikes.
  • EU leaders, including German Chancellor Friedrich Merz and French President Emmanuel Macron, are urging a swift agreement to avoid an all-out trade war with Washington.
  • Talks between EU and US negotiators have intensified in recent weeks, with the US seeking concessions on EU rules, particularly digital competition, content, and AI regulations.

Statistics:

  • 100 billion euros: Worth of EU goods that would be slapped with tariffs by the US if negotiations fail to yield an agreement.
  • 25 percent: Tariff on steel, aluminium, and auto goods exported to the US from the EU.
  • 10 percent: Tariff on a majority of EU products exported to the US.
  • 50 percent: Tariff threatened by Trump if no agreement is reached.
  • July 9: Deadline for the EU to reach a trade deal with the US or face swingeing tariffs.

Sources:

  • [European Union]
  • [The European Commission]
  • [The EU]
  • [Bart De Wever, Belgian Prime Minister]
  • [Friedrich Merz, German Chancellor]
  • [Ursula von der Leyen, European Commission President]
  • [Emmanuel Macron, French President]
  • [Giorgia Meloni, Italian Prime Minister]
  • [Viktor Orban, Hungarian Prime Minister]

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