Trump, EU’s von der Leyen to meet to clinch trade deal
[GLASGOW] European Commission President Ursula von der Leyen is set to meet US President Donald Trump on Sunday (Jul 27) to clinch a trade deal for Europe that would likely see a 15 per cent baseline tariff on most EU goods, but end months of uncertainty for EU companies.
US and EU negotiators huddled in final talks on tariffs facing crucial sectors like cars, steel, aluminium and pharmaceuticals before the meeting, which is expected at 1530 GMT on Trump’s golf course in Turnberry, western Scotland.
US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick flew to Scotland on Saturday and EU Trade Commissioner Maros Sefcovic arrived on Sunday morning.
Lutnick told “Fox News Sunday” that the EU needed to open its markets for more US exports to convince Trump to reduce a threatened 30 per cent tariff rate that is due to kick in on Aug 1.
“The question is, do they offer President Trump a good enough deal that is worth it for him to step off of the 30 per cent tariffs that he set,” Lutnick said, adding that the EU clearly wanted – and needed – to reach an agreement.
A separate US administration official was upbeat that a deal was possible. “We’re cautiously optimistic that there will be a deal reached,” the official said, speaking on condition of anonymity. “But it’s not over till it’s over.”
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The EU deal would be a huge prize, given that the US and EU are each other’s largest trading partners by far and account for a third of global trade.
Ambassadors of EU governments, on a weekend trip to Greenland organised by the Danish presidency of the EU, held a teleconference with EU Commission officials on Sunday to agree on the amount of leeway von der Leyen would have.
In case there is no deal and the US imposes 30 per cent tariffs from Aug 1, the EU has prepared counter-tariffs on 93 billion euros (S$140 billion) of US goods.
EU diplomats have said a deal would likely include a broad 15 per cent tariff on EU goods imported into the US, mirroring the US-Japan trade deal, along with a 50 per cent tariff on European steel and aluminium for which there could be export quotas.
EU officials are hopeful that a 15 per cent baseline tariff would also apply to cars, replacing the current 27.5 per cent auto tariff.
Possible exemptions
Some expect the 27-nation bloc may be able to secure exemptions from the 15 per cent baseline tariff for its aerospace industry and for spirits, though probably not for wine.
The EU could also pledge to buy more liquefied natural gas from the US, a long-standing offer, and boost investment in the US.
Trump told reporters there was “not a lot” of wiggle room on the 50 per cent tariffs that the US has on steel and aluminium imports, adding, “because if I do it for one, I have to do it for all.”
The US president, in Scotland for a few days of golfing and bilateral meetings, told reporters upon his arrival on Friday evening that von der Leyen was a highly respected leader and he was looking forward to meeting with her.
He said there was a 50-50 chance that the two sides could reach a framework trade pact, adding that Brussels wanted to “make a deal very badly”.
The EU now faces US tariffs on more than 70 per cent of its exports, with 50 per cent on steel and aluminium, an extra 25 per cent on cars and car parts on top of the existing 2.5 per cent and a 10 per cent levy on most other EU goods. EU officials have said a “no-deal” tariff rate of 30 per cent would wipe out whole chunks of transatlantic commerce.
A 15 per cent tariff on most EU goods would remove uncertainty but would be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal on all industrial goods.
Seeking to learn from Japan, which secured a 15 per cent baseline tariff with the US in a deal earlier this week, EU negotiators spoke to their Japanese counterparts in preparation for Sunday’s meeting.
For Trump, aiming to reorder the global economy and reduce decades-old US trade deficits, a deal with the EU would be the biggest trade agreement, surpassing the US$550 billion deal with Japan.
So far, he has reeled in agreements with Britain, Japan, Indonesia and Vietnam, although his administration has failed to deliver on a promise of “90 deals in 90 days.” REUTERS
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