After NATO deal, how far will EU go for trade peace with Trump?

Arab News

7 hours ago

BRUSSELS, Belgium: After satisfying Donald Trump's calls for Europe to ramp up defense spending in NATO, EU leaders in Brussels turned Thursday to the next big challenge ahead: how to seal a trade deal with the US leader.
Time is running out. The European Union has until July 9 to reach a deal or see swingeing tariffs kick in on a majority of goods, unleashing economic pain.
The European Commission, in charge of EU trade policy, has been in talks with Washington for weeks, and the leaders of Europe's two biggest economies France and Germany on Thursday urged Brussels to move fast in search of a deal.
'France is in favor of reaching a quick agreement, we don't want it to drag on forever,' President Emmanuel Macron told reporters after summit talks involving the bloc's 27 leaders and EU chief Ursula von der Leyen.
While Macron said European nations 'do not want a deal at any cost,' Germany's chancellor has signalled he wants to close a deal fast — even if it means an unbalanced outcome with some level of US tariffs on EU goods.
'It's better to act quickly and simply than slowly and in a highly complicated way,' Friedrich Merz told a press conference after the talks.
The EU has put a zero-percent tariff proposal on the table — but it's widely seen as a non-starter in talks with Washington.
Von der Leyen said the commission had just received the latest US counterproposal, adding: 'We are assessing it as we write, speak right now.'
'Swiss cheese' option
According to several diplomats, the goal at this point is rather to let Trump claim victory without agreeing a deal that would significantly hurt Europe.
One diplomat suggested leaders would be happy with a 'Swiss cheese' agreement — with a general US levy on European imports, but enough loopholes to shield key sectors such as steel, automobiles, pharmaceuticals and aeronautics.
This would be less painful than the status quo with European companies currently facing 25-percent tariffs on steel, aluminum and auto goods exported to the United States, and 10 percent on a majority of EU products.
Merz had earlier this week taken aim at the EU's approach to talks as overly complicated, urging 'rapid, joint decisions for four or five major industries now.'
The issue was the focus of Thursday's summit dinner, at which von der Leyen was able to test leaders' red lines in negotiations.
If no agreement is reached, the default tariff on EU imports is expected to double to 20 percent or even higher — Trump having at one point threatened 50 percent.
White House Press Secretary Karoline Leavitt on Thursday suggested the administration could extend the July deadline but said 'that's a decision for the president to make.'
Avoiding escalation
Unlike Canada or China, which hit back swiftly at Trump's tariff hikes, the EU has consistently sought to negotiate with the US leader — threatening retaliation only if no agreement is reached.
'We will not allow ourselves to be provoked, we will remain calm,' said Belgian Prime Minister Bart De Wever, urging the EU to avert an all-out trade war with Washington.
Talks between EU and US negotiators have intensified in recent weeks.
Trump divides the Europeans.
Hungarian Prime Minister Viktor Orban and Italian Prime Minister Giorgia Meloni are both vocally supportive of Trump — while others are more wary.
'The problem is that on behalf of the United States, we have a heavyweight dealmaker — on our side, European Union, have light capacity and capability leaders to negotiate,' said Orban.
Pro-trade countries in Europe's north are especially keen to avoid an escalation.
The EU has threatened to slap tariffs on US goods worth around 100 billion euros, including cars and planes, if talks fail to yield an agreement — but has not made any mention of those threats since May.
The United States is also using the negotiations to try to extract concessions on EU rules — particularly digital competition, content and AI regulations, which Washington claims unfairly target American champions such as Apple, Google, and Meta.
Europeans are ready to discuss common transatlantic standards, but the EU's digital rules are a red line for Brussels.