The pessimism of recent weeks turned into optimism in Brussels on Wednesday: a trade pact between the United States and the EU seems closer than ever. Negotiators are close to reaching an agreement with general tariffs on European exports of 15%, which would halve the 30% threat that had been imposed, following Donald Trump's letter to Brussels, if a solution was not reached by August 1. This is according to diplomatic sources consulted by EL PAÍS following information released by the British newspaper Financial Times.
The European Commission communicated this first draft to the representatives of the Member States on Wednesday. If this negotiation framework is successful, the plan would not represent a major departure from the current situation regarding US tariffs on Europe, although it worsens the preconditions for the start of the trade war that Trump has declared to the world upon his return to the White House.
The pact looming on the horizon is very similar to the one Washington reached with Japan this Tuesday. Before its confirmation, Trump's approval is needed; nothing in Washington escapes his supervision in this matter."Everything depends on him," explain European diplomatic sources, who assume that the final say will lie with the White House resident.
The agreement being drafted consists of a general tariff of around 15% on EU exports to the United States. This percentage, in fact, ratifies the current situation, in effect since early April, when Washington suspended the falsely called"reciprocal tariffs" and left them at an additional rate of 10%, in addition to the 4.8% already applied previously. Thus, the new agreement represents only a slight increase over the previous one. The increase is, however, considerable compared to the conditions that prevailed before the outbreak of the trade war.
Details remain to be revealed regarding what will happen to sectors of great importance from a European perspective, such as automobiles and automotive components. These exports, crucial for Germany and other countries, such as Slovakia and Hungary, now pay 27.5% tariffs to enter the United States: the 2.5% tariffs imposed prior to Trump's return to power and the additional 25% tariffs he imposed.
It's also crucial to know what will happen with the investigations opened into sectors such as pharmaceuticals—on which the US president threatened to impose a 200% tariff—and semiconductors. However, given the optimism in Brussels this Wednesday, it's likely that these obstacles, which were present until last Friday, have disappeared.
Possible answers
Given the possibility that the agreement with the United States may not materialize, the EU is also continuing to prepare for possible retaliation. Diplomatic sources indicate that this possibility was discussed at the meeting of member states' ambassadors to the EU, and that France has taken the toughest stance.
Wednesday began in Brussels with the news that the European Union was ready to apply tariffs on US products if its negotiators did not sign an agreement, and that these would begin to be applied starting August 7. In total, the levies would be worth 93 billion euros (about 110 billion dollars at the current exchange rate), according to the EU's trade spokesman. The threat was met with skepticism by Treasury Secretary Scott Bessent, who said he interpreted the reports of possible retaliation from Brussels as mere tactics to influence the negotiations.
According to Brussels, a call was scheduled for Wednesday afternoon between EU Trade Commissioner Maroš Šefčovič, who has been leading the negotiations, and US Secretary of Commerce Howard Lutnick.
In an interview with Bloomberg television, Bessent said this morning from Washington that talks with the EU were going"better than before." "I think we're moving in the right direction. But as I've said, the EU has a problem: we have to reach a collective agreement; there are 27 countries." Brussels and Washington have been talking for weeks to establish a framework based on Trump's threats. On April 2, he announced that he would impose 20% tariffs on European imports and, a couple of Saturdays ago, sent a letter to Commission President Ursula von der Leyen with the figure of 30%. The agreement will come into effect on August 1 if there is no agreement before then and if the US president does not back down again and grants another postponement.
Regarding the potential consequences of the aftershocks Europe is threatening, Bessent warned: “We are the deficit nation [in the trade relationship]. They are the ones with the surplus. So any escalation in trade issues will always affect them more.” The relationship between the two partners is the most intense in the world, and in 2024 it ended with a deficit of $235.6 billion for Washington, 12.9% more than in 2023, according to the Office of the United States Trade Representative.
The agreement reached with Japan includes, according to Trump's post on his social media platform, Truth,"a $550 billion investment in the United States, which will receive 90% of the profits" and the creation of a "joint venture" for the export of liquefied natural gas from Alaska. Bessent described these points of the pact as"creative additions" by Tokyo. It remains to be seen whether the agreement with Brussels incorporates similar mechanisms to appease Trump's aggressive and volatile policies.
In April, the US president imposed tariffs, misnamed"reciprocal," on dozens of his partners. A week later, he declared a truce until July 9, and his administration boasted that it would be able to reach"90 agreements in 90 days." So far, Washington has reached five agreements: with the United Kingdom, Vietnam, Indonesia, the Philippines, and Japan, in addition to a truce with China, which Bessent, who is traveling to Stockholm this Monday and Tuesday to meet with Beijing negotiators, hopes to consolidate.
Some agreements, such as those with the United Kingdom and Japan, are more widely known than others. Trump tiptoed around the Philippines deal during a visit to the White House by President Ferdinand Marcos Jr. on Tuesday. But the most striking case is Vietnam.
Trump announced it three weeks ago—as he usually does, and as he will almost certainly do with the EU—on his social media platform. Since then, neither side has released details about the common ground, much less documents proving the nature and scope of the agreement, beyond what Trump said: that Hanoi will pay a 20% tariff on goods it wants to export to the United States (40% if they come from Beijing and are"transshipped" in Vietnam), in exchange for"fully opening" its market to Washington.
