The European Union is making a final attempt to avert economic disaster by securing a trade agreement with the US, as President Trump’s July 9th deadline for tariffs looms with only two days left for negotiations. The EU faces the threat of 50% tariffs on its imports, and potentially 70% on others, should a deal not be reached. This economic uncertainty has already led to paused business investments globally and the dollar’s weakest performance in 50 years. The EU’s internal debate centers on whether to prioritize a deal at all costs or to resist an “imbalanced” agreement.
US Treasury Secretary Scott Bessent confirmed that talks, which continued over the weekend, are focused on securing a range of agreements with important partners. The aggressive stance of the Trump administration, with Trump once labeling the EU “nastier than China,” has been a consistent feature of these talks. A recent illustration of this aggression was the threat of 17% tariffs on EU food imports made to Trade Commissioner Maroš Šefčovič during talks with senior US officials. So far, only the UK and Vietnam have secured deals.
The impending deadline raises questions about the EU’s ability to achieve anything more than a “political framework agreement” to extend talks, potentially leaving the existing 10% baseline tariff and other levies on cars, steel, and aluminum in place. European industries are bracing for increased costs, anticipating a minimum 10% tariff on exports to the US, a significant five-fold increase from the 2% average before Trump’s election last year. This strategic shift follows the EU’s acknowledgment that a comprehensive trade deal is no longer attainable.
Consequently, the EU is now aiming for an agreement in principle, or a “framework deal,” similar to the one recently implemented with the UK. While EU diplomats initially dismissed the UK deal as inadequate and potentially non-compliant with WTO rules, and had hoped their greater economic scale would secure a better outcome, they now recognize that a minimalist deal may be the most achievable outcome under the circumstances.