EU rushes to conclude a framework trade deal with US this week
The two sides are also aiming for common ground on non-tariff barriers, digital trade and economic security
[LONDON] The European Union is seeking to conclude a preliminary trade deal with the US this week that would allow it to lock in a 10 per cent tariff rate beyond an Aug 1 deadline as they negotiate a permanent agreement.
The EU is seeking an exemption from the 10 per cent rate for certain key products including aircrafts, aircraft parts as well as wine and spirits, according to sources familiar with the matter. Some form of relief is expected as part of the agreement in principle.
The European Commission, which handles trade matters for the EU, briefed member states on Monday (Jul 7) on the status of the negotiations. A spokesperson from the commission declined to comment on the ongoing talks.
The US announced on Monday that universal tariffs that were due to kick in Jul 9 would be delayed until at least the beginning of August. For the EU, tariffs on nearly all its exports to the US will jump to 50 per cent on that date if it does not strike a deal beforehand.
Trump has imposed tariffs on almost all US trading partners, saying he wants to bring back domestic manufacturing, needs to pay for a tax-cut extension and stop other countries from taking advantage of the US.
The EU is also pushing the US for quotas and exemptions to effectively lower Washington’s 25 per cent tariff on automobiles and car parts as well as its 50 per cent tariff on steel and aluminium, according to the sources. But a breakthrough on those levies is not immediately forthcoming.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
However, the two sides are discussing a so-called offsetting mechanism that would allow companies that make automobiles in the US to export a certain number tariff free, said the sources.
Some officials are concerned that such an arrangement could see investments and production shift across the Atlantic, Bloomberg previously reported.
Any initial deal would likely be short and not legally binding. The two sides are also aiming for common ground on non-tariff barriers, digital trade and economic security.
In addition to so-called reciprocal tariffs and sectoral levies on cars and metals, the US is working to introduce duties on other sectors, including pharmaceuticals and semiconductors.
Member states are divided on how imbalanced a deal the bloc should accept, with some pushing for a quick agreement while others want the EU to impose countermeasures and negotiate from a position of strength.
The EU will assess any end result and at that stage decide what level of asymmetry it’s willing to accept and whether any rebalancing measures would be required, Bloomberg previously reported.
The EU has approved tariffs on 21 billion euros (S$31.5 billion) of US goods that can be quickly implemented in response to Trump’s metals levies. They target politically sensitive US states and include products such as soybeans from Louisiana, home to House Speaker Mike Johnson, as well as agricultural products, poultry and motorcycles.
The bloc has also prepared an additional list of tariffs on 95 billion euros of American products in response to Trump’s so-called reciprocal levies and automotive duties. They would target industrial goods including Boeing aircraft, US-made cars, and bourbon.
The EU is also consulting member states to identify strategic areas where the US relies on the bloc, as well as potential measures that go beyond tariffs such as export controls and restrictions on procurement contracts. BLOOMBERG
Share with us your feedback on BT's products and services
