The Europian Union (EU) is prepared to accept a 10% US-led across-the-board tariff on a broad range of its exports in ongoing trade talks with U.S. President Donald Trump, but is demanding strategic exemptions for key sectors, per Bloomberg.
Brussels is seeking lower tariff rates for industries like pharmaceuticals, semiconductors, aircraft, and alcoholic beverages, and is negotiating quotas and exemptions from Washington’s punitive tariffs on autos, steel, and aluminum.
Trump’s trade deadline is July 9, after which the US may impose punitive tariffs of up to 50% on nearly all EU exports to the US. The threat covers some €380 billion ($445 billion) of EU exports to the US, or around 70% of the bloc’s trade with the US — a scale that has rattled markets and officials.
The European Commission, which conducts trade negotiations on behalf of the bloc, finds the current proposal somewhat weighted towards the US but not necessarily objectionable if sensitive sectors are shielded. Those familiar with the matter say the EU insists it needs clear concessions before it will accept an asymmetric deal.
Negotiations have intensified as both sides grow increasingly optimistic that an interim agreement can be signed to move talks beyond the July deadline. The outline would encompass not just tariff terms but also non-tariff barriers, regulatory convergence, and strategic investments in areas like liquefied natural gas and artificial intelligence.
Trade Commissioner Maros Sefcovic will lead a delegation to Washington this week in a last push to finalize terms. EU officials are optimistic of an agreement in principle, but there is no word yet on how long any interim deal would run.
The Commission wants assurances that existing sectoral tariffs, like 25% on cars and 50% on metals, as well as all future US tariffs, will be pre-negotiated. In the meantime, the EU continues to push its simplification agenda to address non-tariff barriers to trade and has shown interest in joint economic security cooperation with the US.
The US proposal, submitted to Brussels earlier this week, includes tariff provisions, non-tariff barriers to trade, and strategic cooperation, but the exact terms have not been shared with EU member governments. Officials are now weighing four scenarios before the deadline: a good deal with limited asymmetry, an imbalanced offer that would need to be rejected, an extension of the deadline, or a breakdown followed by across-the-board tariff hikes..
EU officials indicate that a mutually beneficial agreement remains their first choice. Any final deal, however, will be gauged by how much asymmetry the EU will tolerate without undermining its long-term economic and geopolitical interests.
The S&P 500 dipped 12 points briefly after reports of the EU’s position emerged, before recovering as prospects for a deal improved. The index is still on track for its best quarterly run since December 2023, a reflection of market vulnerability to transatlantic trade tensions.
As the world watches the US-EU confrontation, trade specialists state that the outcome could redraw the global tariff landscape and establish a model for how America wields its trade policy during a second Trump administration. For now, the fate of $445 billion worth of EU exports — and the sanctity of US-European trade diplomacy — hangs in the balance.
