EU and US Move Closer to 15% Tariff Agreement Amid Trade Talks

Negotiations between the European Union and the United States are advancing toward a potential agreement that would establish a 15% tariff on most products. According to diplomats familiar with the discussions, EU member states are showing readiness to accept this rate, which EU officials aim to extend to various sectors, including automobiles.

In contrast, imports of steel and aluminium that exceed specific quotas would incur a significantly higher duty of 50%, as indicated by one diplomat. While the EU expresses optimism about reaching an agreement, there remains caution due to the final approval needed from US President Donald Trump, whose decisions are often unpredictable.

Should negotiations collapse, the EU has prepared plans to impose 30% tariffs on approximately €100 billion worth of US goods. This move would be triggered if President Trump follows through on his threat to apply that rate to most EU exports after August 1. The European Commission has stated that as part of initial countermeasures, it would combine an already approved list of tariffs on €21 billion of US goods with a proposed list covering an additional €72 billion of US items.

US exports, which include industrial products such as Boeing aircraft, American-made cars, and bourbon whiskey, would be subject to tariffs that align with Trump’s threatened 30% rate. Scott Bessent, US Treasury Secretary, dismissed the EU’s potential tariffs as a negotiating tactic, saying, “It’s what I would do if I were in their place.”

On a related note, President Trump recently announced two tariff deals—one with the Philippines and another with Japan. Both agreements featured lower import duties than those initially proposed. Notably, the 15% US levy on Japanese automobiles is less than the current 25% rate imposed on major car exporters, including the EU.

Bessent remarked that discussions are progressing more positively than before, stating, “I think that we are making good progress with the EU, but as I’ve said before, the EU has a collective action problem with 27 countries.”

The EU’s most significant trade tool, the Anti-Counterfeiting Instrument (ACI), is gaining traction among member states advocating for its use if a deal is not reached. Although this instrument is currently not active, its implementation would require a qualified majority among member states. If enacted, the ACI would allow the EU to initiate various retaliatory measures, including new taxes on US technology companies, targeted restrictions on investments, and limiting access to the EU market.

Discussions regarding the ACI are ongoing among EU members. While some capitals are pushing for its activation, a majority prefer to wait and observe developments beyond August 1 before pursuing further discussions to achieve the necessary majority for its use. The consensus remains focused on maintaining negotiations with Washington.

European leaders are currently in Tokyo and Beijing for talks with key trading partners in Asia. The recent US-Japan trade agreement has boosted the stocks of European automakers, as it raises hopes that American import tariffs on their vehicles could be reduced.