Introduction to EU-US Trade Talks
The European Union endeavors to cede a 20% tariff to its transatlantic exports and has agreed to "intensify" the trade talks with the United States after being accused of being pulled too slowly. The EU trade commissioner gave the update on Thursday before a meeting of the EU trade minister in Brussels and added that he and his US counterpart should soon meet.
Background of the Trade Talks
The EU summit should consolidate the position of the block in the negotiations in order to avoid the additional taxes that occur from July after US President Donald Trump has sealed its first offers since the announcement of so-called mutual tariffs for most global imports last month. After a tense patient situation, Washington and Beijing concluded a temporary contract last week and reduced the penalty tariffs of over 100% to a more sustainable level.
Temporary Contract Between US and China
If the negotiations for a long-term deal intensify, Chinese goods that enter the United States will arouse a 30% tariff for the next 90 days, while exports from the USA will be exposed to China with a delivery of 10%. Days earlier Trump secured the first overview of a trade agreement since the proclaiming of April 2 as a "liberation day" when he announced stiff worldwide tariffs.
EU-US Trade Agreement
The wide pact with the United Kingdom reduces the tariffs to British automobile manufacturers that export to the United States and granted American exporters, including farmers and ethanol producers, increases access to the British market. The EU has already threatened new tariffs for € 95 billion (107 billion US dollars) US goods in response to Trump’s former tariffs to aluminum, steel and European car manufacturers, but held it to enable negotiations.
Trump’s Demands from the EU
Claudia Schmucker, head of the Center for Geopolitics, Geoeconomy and Technology, does not believe that China and Great Britain really "change" business. "Trump still expects the EU to offer something that is valuable enough," said Schmucker and added that the President’s claims from Europe remain a "puzzle", but should probably include more agriculture and energy sports.
EU’s Offer to the US
So far, the EU has offered to increase the imports of US liker-earth gas, advanced AI technology and soybeans and at the same time propose tariffs from zero-for-zero for all industrial goods. However, Brussels has excluded to reduce other US stimuli – through sales tax (VAT) and regulations that Trump perceives the block as an unfair advantage.
Trade Deficit Between US and EU
Last year, the United States had a trade deficit of 235.6 billion US dollars (210 billion euros) with the EU, an increase in the previous year by 12.9%, according to the office of US trade representative. The latest 2023 data from Eurostat, the EU statistical authority, bring the EU’s surplus to 157 billion euros.
Impact of Trump’s Rhetoric on EU
Jewelry believes that the negative rhetoric of the president, who included an unfounded claim that the EU was created to "tear down" the United States, plays in Brussels, while the EU states are trying to achieve a consensus about how to urge themselves as Hungary, Italy and some other bilateral business. "Even if some EU countries are not completely on board with Brussels’ negotiating position, Trump’s antagonism is sufficient to promote the EU unit," she said.
EU’s Strategy for US Trade Talks
Before the talks on Thursday in Brussels, Swedish Minister of Commerce Benjamin Dousa was doubtful to a fast US-EU deal and said he didn’t think it was likely in the "coming weeks". If Trump holds the basic tariff of 10% for all imports announced last month, Dousa said: "The USA can expect countermeasures from us."
Importance of EU Market for US Services
Miguel Otero, Senior Fellow for international political economy, believes that the United States "has a lot to lose". "The EU has a big deficit in terms of services, especially about financial and digital services and entertainment platforms," Otero said. "The United States cannot afford to lose the European market. If we act as a single company, the EU has as much lever as China."
EU’s Trade with the US
Although the EU has a significant excess of goods in the United States, with a fifth of EU goods being crossed over the Atlantic last year, the block also accounts for 25% of the US services, which are worth $ 275 billion in 2024. Including Switzerland and Great Britain, 42% of US service exports are sent to the European market.
Upcoming Deadline for Trade Talks
As a deadline for the 90-day break on "mutual" tariffs of the EU approaches, the window is narrowed for a deal. Trump will be exposed to a critical decision: return to the higher tariffs announced in April or extends the break. The capital economy predicts that Trump will extend the break, but can drive the negotiations to the edge, which will maintain the pressure on trading partners.
Conclusion
Before the negotiations on Thursday, however, the German Minister of Economic Affairs Katherina Reiche met a more optimistic tone and emphasized the important role of the United States as a trading partner for the EU. "We negotiate from a position of economic strength … but one that has to be carefully managed," said Reiche. "A solution is essential because the escalation will not leave any winners."
