EU and US Seek Political Agreement to End Tariff War

European Union and U.S. Move Toward Baseline Trade Accord

Key Points of the Emerging Agreement

• Foundational Commitment: A broad framework establishing core trade terms is agreed upon.
• Timing: The deadline for finalizing the agreement is rapidly approaching.
• Deferred Details: Sector‑specific negotiations will be addressed after the base deal is in place.

Implications for Future Trade

The approach signals a strategic focus on essential concessions first, with the expectation that detailed disputes will be sorted out in subsequent rounds.

EU and U.S. Seek Quick Resolution to Tariff Dispute

Diplomatic sources reveal that the European Union and the United States are steering negotiations toward a political framework that could be announced as a “political understanding,” rather than a fully detailed agreement. The goal is to settle the trade row before the July 9 deadline.

Key Points from Brussels Briefing

• The deliberations took place behind closed doors on Monday in Brussels.
• Senior EU diplomat emphasizes that a principle agreement would be the most attainable result given the time crunch.
• The U.S. has proposed a counteroffer lacking specific contractual terms.
• Ambassadors were updated on the negotiations and the new U.S. proposal.

Expected Nature of the Deal

According to the diplomat, the outcome will likely mirror the agreements exchanged between the U.S. and the United Kingdom, or even with China. It will focus on establishing a strategic foundation that paves the way for future, concrete arrangements.

Next Steps

Both sides continue to discuss the material while preparing for a formal announcement. Should an agreement materialize, it will bear the heading of a “political understanding,” signaling a preliminary yet significant move toward resolving trade tensions.

Both sides under pressure

Upcoming Deadline Intensifies Trade Talks Between EU and US

US Tariff Threat Looms

Since mid‑March, Washington has adopted a hard‑line stance that has destabilised trade ties worldwide. The administration is now levying a 50% tariff on EU steel and aluminium, a 25% tariff on cars, and a 10% tariff on all other EU imports. President Donald Trump has warned that, if negotiations break down before the 9 July deadline, these steep duties could be enforced.

Negotiation Dynamics

The European Commission, acting on behalf of its 27 member states, began talks with the Trump administration in mid‑June. Initially, the Commission proposed a zero‑tariff corridor for industrial goods and an offer to purchase strategic supplies, including U.S. liquefied natural gas. Recent developments suggest the parties are exploring a deal that would preserve a baseline 10% tariff on EU imports while potentially lowering duties for sectors such as aircraft—areas where trans‑Atlantic production lines are tightly intertwined.

Member State Responses

• Germany and Italy appear supportive of a 10% baseline arrangement.
• Ireland and France remain skeptical, demanding reciprocal compensation for U.S. goods if the tariff level is kept.
• French President Emmanuel Macron, during a June 26 EU summit, called for parity: “If the U.S. maintains a 10% tariff, then an equivalent 10% levy must apply to U.S. imports as well.”

Potential for Sector‑Specific Agreements

A second EU diplomat told Euronews that the current accord might be intentionally brief, paving the way for more detailed, sector‑by‑sector negotiations. “It is conceivable that some areas will be addressed while others remain untouched,” the official said, hinting at the possibility of selective concessions from both sides.

‘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.

Related

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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.”

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