10 percent tariff: EU considers rudimentary trade agreement with the USA

The EU is considering a provisional trade agreement with the USA, which provides for a ten percent tariff on most exports. According to a report by Politico, the EU Commission informed ambassadors of the member states of this on Friday. The Brussels government institution itself was initially vague on Thursday after a decisive round of talks in Washington. In the US capital, EU Trade Commissioner Maroš Šefčovič is said to have attempted to brush off US President Donald Trump's threat to impose a 50 percent tariff on all European goods from July 9 without a deal.

In addition to the potential basic tariff, talks are to continue on relief for certain industries such as the automotive industry, according to national officials. The reported outcome falls short of the expectations of many EU countries. The Commission's negotiating team had previously stated that the possibility of pre-established tariff relief for some sectors would be examined. The USA is currently imposing 25 percent tariffs on cars and 50 percent on steel and aluminum from the EU as a result of a decision by the Trump administration.

Despite the intensive talks, Commission President Ursula von der Leyen (CDU) is likely to find it difficult to reach an agreement that satisfies all sides and sell it as a success. The member states reportedly want to keep all options on the table for now – up to and including breaking off the negotiations. Recently, the US side threatened the EU with a 17% tariff on food imports, reports the Financial Times.

Deal announcement during the week?

EU circles expect von der Leyen to hold individual consultations with the EU heads of state and government over the weekend before agreeing on a framework agreement. Trump will meet with his advisors on Monday. A formal announcement of a deal is expected in the middle of the week at best.

According to the Commission, Trump will divide US trading partners into three categories, an EU diplomat told Politico. Initially, the suspension of its "reciprocal" tariffs would remain in place where there is a preliminary agreement. Additional relief would be possible at a later date. In a second section, the country-specific tariffs – announced by Trump in April would be reintroduced in the case of the EU 20 percent – if no agreement is foreseeable. In a third class, higher country tariffs would remain in place until further notice as long as the talks are going badly.

Von der Leyen: Agreement in principle will be reached

Von der Leyen stated on Thursday that she was aiming for an "agreement in principle". This would be similar to an agreement between the UK and the USA, which maintains a basic tariff and excludes car and steel exports. Talks on a more comprehensive agreement are still ongoing.

Several member states have warned that a similar agreement would not be acceptable without an immediate commitment from Trump to exempt key sectors from tariffs. German Chancellor Friedrich Merz (CDU), for example, is pushing for a quick agreement and lower tariffs for Germany's most important export industries. France, Spain, Italy and Denmark, on the other hand, believe that the Commission should push for a better and more balanced agreement with the Trump administration.

Brussels initially put a second round of retaliatory measures against the US tariffs worth 100 billion euros on hold to avoid an escalation. There were also recent reports that the Commission wanted to temporarily waive enforcement of the Digital Markets Act (DMA) for US companies as part of the dispute.

(nie)