EU and US Edge Closer to Tariff Truce Amid Trump’s Deadline

The European Union and the United States are reportedly on the verge of a high-level trade “framework” agreement, aiming to avert steep 50% tariffs on all EU exports, a deadline set by President Donald Trump for next Wednesday. Despite talks in Washington potentially extending to the last minute, diplomats and officials indicate the EU is prepared to accept Trump’s proposed 10% blanket tariffs. This concession, however, hinges on securing an extension for broader negotiations and potential relief from the 25% tariff on cars, a measure significantly impacting the German auto industry.
Hints of a potential breakthrough emerged after a meeting in Washington on Thursday morning between EU Trade Chief Maroš Šefčovič and US Treasury Secretary Scott Bessent. Bessent, speaking at a wider briefing, expressed optimism about reaching a deal with the EU, declaring the US anticipated “a lot more trade deals.” Further discussions are scheduled for Thursday afternoon between Šefčovič, US Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer, with EU ambassadors expected to receive updates on Friday.
The pressure mounts as Trump has explicitly threatened the 50% tariffs unless a deal is struck by July 9th. Currently, most EU goods face a 10% tariff, with specific sectors like cars and car parts hit with 25% and steel and aluminum at 50%. The current push for a “UK-style” agreement in principle, a less detailed initial deal, aligns with recent calls from German Chancellor Friedrich Merz for a swift resolution to ease the burden of what he considers “far too high” tariffs on German businesses.
Sources close to the talks reveal the EU is seeking a “standstill clause” within any extension to guarantee no new tariffs are imposed. While some anticipate a deal by this week, potentially offering Trump a significant announcement on Independence Day, the process is complex. The US’s latest proposal, delivered to EU leaders last Wednesday, reportedly lacked specifics on US concessions, and the EU is also wary of American demands concerning strategically important sectors, economic purchases, and non-trade barriers, which represent “red lines” for the bloc.