EU and US aim for political understanding to resolve tariff dispute

Euronews

2 days ago

The EU and the US are moving toward an agreement that would take the form of a headline 'political understanding' to resolve their tariff dispute before the 9 July deadline, rather than a comprehensive deal, according to several diplomats and an EU official.
'If there is to be an agreement, the most realistic outcome would likely be a general framework or a 'principle agreement' — something that, due to time constraints, would resemble the kind of understanding the US has reached with the UK or even with China,' a senior EU diplomat said.
'This would not be a detailed, comprehensive trade deal, but rather a political understanding laying the groundwork for more concrete arrangements," they added.
The potential agreement was discussed at a behind-closed-doors meeting in Brussels on Monday, with European Commission officials briefing EU ambassadors about the ongoing negotiations between the EU and the US.
Ambassadors were also informed of a new US counterproposal, which offered 'nothing very concrete', one of the diplomats said.
Both sides under pressure
The EU and the US are under pressure from the looming 9 July deadline, after which US President Donald Trump has threatened to impose 50% tariffs on EU imports if negotiations fail.
Since mid-March, Washington has implemented a new policy that calls into question its trade relations with partners across the globe. The US currently imposes tariffs of 50% on EU steel and aluminium, 25% on cars, and 10% on all EU imports.
After weeks of fruitless discussions, negotiations between the European Commission — which holds the mandate to negotiate on behalf of the 27 member states in trade matters — and the Trump administration began in mid-June, but their outcome remains in doubt.
The Commission initially proposed a zero-tariff agreement on industrial products and an offer to purchase strategic goods such as US liquefied natural gas. But it now appears to be coming to terms with a deal that would maintain a baseline 10% tariff on EU imports. Lower tariffs might then be negotiated for strategic sectors such as aircraft, for which transatlantic production lines are interdependent.
However, member states are divided over a potential deal with a baseline 10% tariff. Germany and Italy are reportedly in favour, while countries like Ireland and France remain more sceptical.
'If the US maintain 10% tariffs, there will have to be compensation on goods and products imported from the US,' French president Emmanuel Macron stated on 26 June after an EU summit, adding: 'The levy must be the same — 10% for 10%, or the equivalent of 10%.'
A second EU diplomat told Euronews that the agreement could be deliberately short for the two parties to reach further and more detailed agreements in different sectors.
"It is not excluded that some sectors could be addressed while others are not," an EU official said.
'Asymmetrical agreement' possible
European Commission officials also asked ambassadors to consider several scenarios, including the possibility of an 'asymmetrical agreement' in which the EU would make more concessions than the US, the prospect of no deal, and the option of the EU triggering retaliatory measures.
During the same meeting with the member states, the Commission indicated that a second list of countermeasures proposed on 8 May was still under development, according to a third EU diplomat.
This list was subject to feedback from industry over several weeks, and member states will still need to adopt it formally.
The proposed list targets €95 billion in US products. It would come on top of a first list of retaliation, which covers €21 billion worth of US products and was suspended until July 14 after Donald Trump announced a 90-day truce in the trade dispute.
A team of Commission experts is in Washington this week to advance the negotiation.
The EU's trade commissioner, Maroš Šefčovič, is set to travel there on Wednesday for a meeting on Thursday with his American counterparts, US Secretary of Commerce Howard William Lutnick and US Trade Representative Jamieson Lee Greer.
On Monday, Šefčovič confirmed that the bloc had received 'the first draft of the (US) proposals for the eventual agreement in principle.'