URGENT UPDATE: The European Union (EU) and the United States are moving closer to a significant trade agreement that could impose a 15% tariff on a wide range of products, according to diplomats familiar with the ongoing negotiations. This development comes as EU member states prepare to accept these terms, which could greatly impact various sectors, including the automotive industry, officials reported.
Trade talks are intensifying as EU leaders engage with major trading partners in Tokyo and Beijing this week. While optimism is high, the final agreement hinges on the unpredictable sign-off from US President Donald Trump, diplomats warn. Trump’s recent announcement of tariff deals with the Philippines and Japan—both featuring lower-than-expected import duties—has added a layer of complexity to the negotiations.
As part of the proposed deal, imports of steel and aluminum exceeding a specific quota could be subjected to a hefty 50% duty. This move aims to protect EU industries while balancing trade relations with the US. Scott Bessent, US Treasury Secretary, acknowledged ongoing improvements in negotiations, stating, “Talks are going better than they had been. I think that we are making good progress with the EU.”
In a critical statement, German Chancellor Friedrich Merz emphasized the urgent need for a reliable agreement to mitigate economic uncertainty. “We need a fair, reliable agreement with low tariffs,” Merz told reporters in Berlin on Tuesday after discussions with Czech Prime Minister Petr Fiala. The Chancellor’s remarks underline the potential fallout from unresolved tariff disputes, especially as the deadline for negotiations approaches on August 1.
Furthermore, the EU is deliberating the potential use of its anti-coercion instrument (ACI) as leverage should negotiations falter. The ACI could enable the EU to implement retaliatory measures, such as new taxes on US tech giants and restrictions on US investments. However, activating this tool requires a qualified majority from member states, complicating its immediate application.
Despite the challenges, EU negotiators remain committed to achieving a breakthrough before the impending deadline. Current discussions suggest that the US is seeking a near-universal tariff on EU goods exceeding 10%, with few exemptions. The outcome of these negotiations could reshape transatlantic trade relations significantly.
As developments unfold, the impact of this potential trade agreement is expected to resonate across industries, affecting everything from consumer prices to international supply chains. Stay tuned for more updates as this story continues to develop.
