EU and US move toward trade deal that could include a 15pc baseline tariff on EU goods with possible exemptions
The rate, which could also extend to cars, would mirror the framework agreement the U.S. has struck with Japan, which Trump announced late on Tuesday.
There could be concessions for sectors like aircraft and lumber as well as some medicines and agricultural products, which would not face tariffs, the diplomats said. Washington does not, however, appear willing to lower its current 50pc tariff on steel, they said.
The White House did not immediately respond to a request for comment. Trump trade adviser Peter Navarro told Bloomberg News the report from the EU should be taken with "a grain of salt." As talks continued, the European Commission said it would press on with potential counter-measures in case a deal was not reached.
EU member states were set to vote on 93 billion euros of counter-tariffs on U.S. goods on Thursday, European diplomats said. A broad majority of members support using anti-coercion instruments if there is no deal, they said. Trump was aiming to secure an agreement on the heels of a complicated deal reached with Japan, the largest foreign investor in the U.S. That deal included a $550 investment and loan pledges from Japan and its commitment to buy 100 Boeing airplanes and boost purchases of U.S. agricultural products.
That investment - to be spent at Trump's discretion - would focus on key industries like energy, semiconductors, critical minerals, pharmaceuticals and shipbuilding, the White House said on Wednesday.
Tariffs on Japan's auto sector will drop from 27.5pc to 15pc as part of the agreement, reviving hopes for similar treatment for European cars. Asian and European stock markets rallied as investors cheered the U.S.-Japan agreement, but U.S. stocks showed a more modest rise and earnings reports were gloomy. American businesses making everything from chips to steel reported downbeat results on Wednesday, revealing how the Trump administration's chaotic trade policy has hurt profits, added to costs, upended supply chains and weighed on consumer confidence.
U.S. automakers signaled their unhappiness with the Japan deal, raising concerns about a trade regime that cuts tariffs on Japanese auto imports while leaving 25pc tariffs on imports from their plants and suppliers in Canada and Mexico.
"Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American-built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers," said Matt Blunt, the president of the American Automotive Policy Council, which represents General Motors, Ford and Chrysler parent Stellantis.
Automobile stocks led the climb of European shares after the Japan deal spurred hopes that the U.S. was budging over tariffs on EU cars. EU officials have previously said Washington has shown little sign of doing so.
U.S. Treasury Secretary Scott Bessent said in an interview with Bloomberg Television that Japan received the 15pc rate on auto tariffs "because they were willing to provide this innovative financing mechanism" that he did not think other countries could replicate.
Trump, however, has appeared open to a range of options as the U.S. negotiates trade deals.
"I will only lower tariffs if a country agrees to open its market," Trump wrote in a social media post on Wednesday.
The Republican president said late on Tuesday that other countries would be coming to Washington for talks this week. Governments were scrambling to close trade deals before next week's deadline that the White House has repeatedly pushed back under pressure from markets and intense lobbying by industry.
U.S. and Chinese officials plan to meet in Stockholm next week to discuss extending an August 12 deadline for negotiating a trade deal.
White House spokesperson Karoline Leavitt on Wednesday would not discuss expectations for the meeting, but said Bessent "looks forward to continuing discussions with his Chinese counterparts."
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