US, EU trade talks boosted by Trump's agreement with Japan

Straits Times

5 days ago

FILE PHOTO: Stacked containers and cranes are shown at the Port of Los Angeles in Los Angeles, California, U.S., November 22, 2021. REUTERS/Mike Blake/File Photo
BRUSSELS/WASHINGTON - The European Union and the U.S. are heading for a potential trade deal that includes a 15% U.S. baseline tariff on EU goods and possible exemptions, two European diplomats said on Wednesday, potentially moving President Donald Trump closer to securing another major trade agreement hours after he unveiled one with Japan.
European negotiators were hoping to reach an agreement to dodge the 30% tariff rate Trump has said he would impose on imports from the 27-nation bloc on August 1.
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. The deal could include exemptions for some EU goods, the diplomats said.
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 hoping for a boost from the complicated deal reached with Japan, the largest foreign investor in the U.S., which 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.
Tariffs on Japan's auto sector will drop from 27.5% to 15% as part of the agreement, reviving hopes for a similar deal for EU cars.
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Asian and European stock markets rallied as investors cheered that agreement, but U.S. stocks showed a more modest rise and earnings reports were gloomy.
U.S. 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.
Trump said late on Tuesday that other countries would be coming for talks this week and 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.
AUTO TARIFFS
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 15% 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.
In addition to talks in Washington, the European Trade Commissioner Maros Sefcovic planned to speak with U.S. Commerce Secretary Howard Lutnick on Wednesday from Brussels. REUTERS