Trump's tariff hike: EU considers agreement with a universal 10% tariff, but seeks exemptions for automobiles, airplanes, and metals.
The bloc considers the proposal asymmetrical, but accepts the provisional agreement to maintain exports and avoid direct confrontation.
247 - The European Union is willing to accept a trade arrangement with the United States that includes a universal 10% tariff on a large portion of its exports, provided Washington offers significant concessions in strategic sectors such as pharmaceuticals, semiconductors, alcoholic beverages, and commercial aircraft. This information was revealed by sources who spoke to Bloomberg on condition of anonymity.
The pressure is high: the deadline for an agreement with President Donald Trump's administration is July 9th. If no agreement is reached by then, a 50% tariff will be imposed on virtually all exports from the European bloc to the US—a measure the Republican says is necessary to boost domestic industry, offset tax cuts, and prevent abuses by trading partners.
European Union seeks exemptions and quotas
In addition to demanding reduced tariffs in high value-added sectors, the EU is also trying to negotiate exemptions and quotas that would soften the heavy taxes currently in place. EUA25% on automobiles and auto parts, and 50% on steel and aluminum. According to sources cited by Bloomberg, the European Commission, responsible for the bloc's trade negotiations, considers the proposal under study to be slightly favorable to the US, but still acceptable.
The European Commissioner for Trade, Maros Sefcovic, is leading a delegation to Washington this week with the aim of unblocking the process. The expectation is for a provisional agreement that extends the negotiations beyond the initial deadline. The Europeans also want any future US tariffs—in addition to those already in place—to be discussed now.
Billions of dollars in exports at risk
Data from the European Commission and ING Groep NV indicate that, in 2024, the EU exported €52,8 billion worth of cars and automotive parts to the United States, its main trading destination. Shipments of steel and aluminum totaled €24 billion, with GermanyItaly and France are in the lead.
According to EU estimates, US taxes currently affect €380 billion — about 70% of all the bloc's exports to the US market.
A spokesperson for the European Commission was contacted but did not respond to requests for comment.
Possible scenarios and threats of retaliation
Four possible outcomes are on the table, according to European authorities who have reported to their member states: 1) an agreement with tolerable asymmetries; 2) an unbalanced US proposal that is impossible to accept; 3) an extension of the deadline for continuing negotiations; or 4) Trump withdrawing from the talks and unilaterally imposing 50% tariffs.
In this last case, the EU promises to react strongly. Retaliatory tariffs have already been approved on €21 billion worth of US products, targeting politically sensitive states such as Louisiana—the stronghold of House Speaker Mike Johnson. The targets include soybeans, chicken, motorcycles, and other agricultural goods.
Furthermore, the EU has prepared an additional list of tariffs on €95 billion worth of American products, should Trump insist on so-called reciprocal tariffs and automotive taxes. This new round would target industrial goods such as Boeing aircraft, automobiles, and bourbon. The bloc is also consulting its members on strategic non-tariff measures, including export controls and restrictions on public contracts.
Focus on strategic cooperation
Alongside tariff negotiations, the EU is trying to include areas of strategic economic cooperation in the package, such as liquefied natural gas and artificial intelligence technologies. Brussels hopes that these elements will broaden the scope of the agreement and avoid a head-on trade confrontation with the US — although the signals coming from the White House, under Trump's second term, are not reassuring.
The European Commission has not yet determined how long any eventual provisional solution would be valid. The final calculation will depend on the degree of imbalance that the bloc is willing to accept.
