Truth Social diplomacy, a shock court ruling and fashion magnate advice: A week inside the EU-US tariff talks

Irish Times

a day ago

European Commission president
Ursula von der Leyen
is not short of advice about how to handle
Donald Trump.
Bernard Arnault, founder and chief executive of French luxury brand giant LVMH, which owns Louis Vuitton, Moët Hennessy and Dior, privately chipped in with his opinion in recent days.
The French businessman sat down with Ms von der Leyen late last week, the day before the US president threw European Union-US negotiations into another tailspin, by threatening to introduce blanket 50 per cent
tariffs
on June 1st.
Mr Trump was later persuaded to
push his sudden deadline out to July 9th
, the date an original 90-day pause on the higher rates of his 'liberation day' tariffs was due to end.
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Mr Arnault, who runs one of Europe's biggest companies, met Ms von der Leyen in the European Commission's headquarters in Brussels to talk about how to avert a transatlantic trade war.
The commission, the European Union's (EU) executive branch that sets the bloc's trade policy, has been making little progress in talks with the Trump administration.
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US federal court blocks Trump from imposing sweeping tariffs
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The LVMH executive told Ms von der Leyen he was concerned about the uncertainty caused by Mr Trump's tariffs on global trade. Mr Arnault singled out the champagne wing of his empire, Moët & Chandon, during the discussion.
In the May 22nd meeting, the details of which have not been reported before, Mr Arnault stressed the need to reach a deal on tariffs with Mr Trump. That is easier said than done.
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For the last two months European businesses have been facing 10 per cent tariffs, which are import taxes, when selling goods into the US. Cars and steel products sold from the EU to the US have been subject to 25 per cent levies.
The threat of across-the-board tariffs of 20 per cent, or even 50 per cent, if negotiations failed, has caused growing alarm across European industries.
Separate duties targeting pharmaceutical imports are being considered, which would be a big economic blow to Ireland.
But the New York-based Court of International Trade on Wednesday struck down Mr Trump's sweeping 'liberation day' tariffs, ruling these were not legal. The US administration has said it will appeal.
'It's a very significant ruling by the court. It gives you some hope that the rule of law still applies in the United States. Let's see what happens,' said Ignacio Garcia Bercero, who was the commission's chief negotiator on an EU-US trade deal abandoned in 2016.
Current talks should pivot to focus on steel, aluminium and automobile tariffs, which are not affected by the ruling, the former senior official told The Irish Times.
Negotiators had been racing to hammer out a deal with Mr Trump and head off the worst of his damaging trade levies before July 9th. The court ruling may buy the EU side more time.
Sources in Dublin and in Brussels are optimistic the US president ultimately wants an agreement, despite the distance between negotiating positions at the moment.
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Court tariffs bombshell should inspire trading partners to defy Trump
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Mr Trump's post on Truth Social threatening 50 per cent tariffs took people by surprise last Friday, even if it was quickly walked back. 'It's all very volatile,' one Government source said.
The shopping list of demands put forward by the White House at one point or another is long. It includes the EU rolling back tech regulations, lowering food safety standards that bar US chlorine-washed chicken and hormone-treated beef and scrapping digital services taxes in France and other countries.
Mr Trump has also criticised value-added tax (VAT) charged on goods and services.
Working out what is negotiating bluster and what the US side is genuinely interested in has been difficult. 'Don't ask me to predict what a final deal will look like,' one commission official said.
The EU has offered to buy more US soybeans and liquefied natural gas (LNG) and to make it easier for the US to sell fish and lobster to the EU and for both sides to drop pre-Trump tariffs on industrial goods to zero.
Some easing or tweaks to EU laws have reportedly been mentioned as another possible concession, but a rollback of online guardrails or food safety standards is a red line the commission won't cross.
Before the New York court ruling there was a growing expectation the EU would have to stomach some baseline level of US tariffs, likely to be the global 10 per cent rate.
Irish businesses were concerned about a no-deal scenario that would leave exports, such as Jameson whiskey or Kerrygold butter, facing a 20 per cent tariff. Irish products would then be sitting on a US supermarket shelf beside Scotch whiskey or a UK butter brand subject to a lower 10 per cent levy.
Ms von der Leyen's top adviser, Bjoern Seibert, is right at the heart of the EU's response, directing the strategy behind the scenes. It is understood many of the decisions made inside the commission on this flow through him.
He briefed representatives from the 27 EU states at the start of this week. The influential adviser suggested a clearer picture of what the US wanted in a deal was starting to emerge, two people said. Exact details of the ongoing negotiations are being kept under wraps.
EU trade commissioner
Maros Šefčovič
and US commerce secretary
Howard Lutnick
had planned to focus their discussions on key sectors such as pharmaceuticals, cars, steel and computer chips. The pair speak on the phone regularly and have met several times.
Other contested points were being discussed by officials. A delegation of commission trade staff is scheduled to travel to the US next week for talks.
The two sides have been exchanging papers setting out their positions, something seen as a forerunner to intensive negotiations taking place in June.
The commission has a set of retaliatory tariffs ready to go, if talks stall.
These tariffs on US soybeans, Harley-Davidson motorbikes, oranges, steel and other products were paused until mid-July to signal to the US that Europe wanted to talk.
A second, larger package of counter-tariffs under consideration would hit US aircraft manufacturers, bourbon whiskey, the automobile industry and many other sectors.
'You need to have them ready ... You keep the gun on the table,' one EU official said of the measures.
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The European aviation industry previously warned the commission against targeting Boeing and other US manufacturers, correspondence shows.
In an April 14th letter to Mr Šefčovič, Airlines for Europe, which counts Ryanair as a member, said import duties would have a 'severe impact' on European airlines.
Companies had placed 'significant' orders for US-made aircraft that they could not cancel, the correspondence seen by The Irish Times said.
The Government has objected to the inclusion of US bourbon, civil aircraft and medical devices on the commission's tariff list, which will be finalised next month.
EU officials have been drawing up a contingency plan to hit the US even harder, should negotiations collapse and steep tariffs kick in. This would focus on services, rather than goods and products.
One option is the EU's anti-coercion instrument (ACI), which has been dubbed the 'big bazooka'. This would allow the bloc to put a levy on US tech giants' digital ad revenues in Europe and restrict US firms from bidding on public contracts in the EU.
The Government here is fiercely opposed to tech multinationals being dragged into the thick of the tariff dispute, given the number of those US companies with bases in Dublin.
It is understood some commission officials believe there is a way to put tariffs on services without having to resort to the bazooka, which requires a months-long investigation first to confirm the EU is facing economic coercion.
The federal trade court ruling has certainly strengthened the EU's hand in negotiations.
However, if Mr Trump's blanket measures remain blocked, he may be more likely to pursue tariffs on targeted industries. Pharma could be top of the list.
A few weeks back a senior commission official said jokingly that if the EU landed a deal in July to suspend all US tariffs, he would head off on a holiday for the rest of the month, plus August. It's fair to say nobody is booking flights or hotels just yet.