European Union envoys are set to meet as early as this week to formulate a plan for measures to respond to a possible no-deal scenario with US President Donald Trump, whose tariff negotiating position is seen to have stiffened ahead of an August 1 deadline, reports Bloomberg.
The overwhelming preference is to keep negotiations with Washington on track in a bid for an outcome to the impasse ahead of next month’s deadline.
Still, efforts have yet to yield sustained progress following talks in Washington last week, according to people familiar with the matter. Negotiations will continue over the next two weeks.
The US is now seen to want a near-universal tariff on EU goods higher than 10 per cent, with increasingly fewer exemptions limited to aviation, some medical devices and generic medicines, several spirits, and a specific set of manufacturing equipment that the US needs, said the people, who spoke on condition of anonymity to discuss private deliberations.
A spokesperson for the European Commission, which handles trade matters for the bloc, said they had no comment to make on the ongoing negotiations.
The two sides have also discussed a potential ceiling for some sectors, as well as quotas for steel and aluminum and a way to ring-fence supply chains from sources that oversupply the metals, the people said. The people cautioned that even if an agreement were reached it would need Trump’s sign off – and his position isn’t clear.
“I am confident we’ll get a deal done,” US Commerce Secretary Howard Lutnick said on CBS’s Face the Nation yesterday. “I think all these key countries will figure out it is better to open their markets to the United States of America than to pay a significant tariff.”
Lutnick added that he had spoken to European trade negotiators early yesterday.
The US president wrote to the EU earlier in the month, warning that the bloc would face a 30pc tariff on most of its exports from August 1. Alongside a universal levy, Trump has hit cars and auto parts with a 25pc levy, and steel and aluminium with double that. He’s also threatened to target pharmaceuticals and semiconductors with new duties as early as next month, and recently announced a 50pc levy on copper. In all, the EU estimates that US duties already cover 380 billion euros ($442bn), or about 70pc, of its exports to the US.
Before Trump’s letter, the EU had been hopeful it was edging towards an initial framework that would allow detailed discussions to continue on the basis of a universal rate of 10pc on many of the bloc’s exports.
The EU has been seeking wider exemptions than the US is offering, as well as looking to shield the bloc from future sectoral tariffs. While it’s long accepted that any agreement would be asymmetrical in favour of the US, the EU will assess the overall imbalance of any deal before deciding whether to pull the trigger on any re-balancing measures, Bloomberg previously reported. The level of pain that member states are prepared to accept varies, and some are open to higher tariff rates if enough exemptions are secured, the people said.
Any agreement would also address non-tariff barriers, cooperation on economic security matters, digital trade consultations, and strategic purchases.
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