US and EU trade Negotiations Face Deadline as Tariff Threats Loom

Brussels – With the clock ticking down to a critical tariffs-europes-economic-advantage/” title=”Trump …: Europe's Economic Advantage?”>July 9th deadline, the United States and the European Union are engaged in intense negotiations to avert a potential trade war. The core issue revolves around tariffs, with the EU pushing for the reduction of existing US duties on key European exports, including cars, steel, and aluminum. Failure to reach an agreement could trigger a new wave of tariffs, impacting billions of dollars in transatlantic trade [[3]].

EU pushes for Tariff Reductions on Key Exports

European negotiators are specifically seeking to persuade the US to lower the existing 25% duties on automobiles and automotive parts, as well as the 50% duty on steel and aluminum. According to an analyst at XTB, Jiří Tyleček, a 10% tariff would be preferable to a full-blown customs war.

Did You Know? in 2024, European Union countries exported cars and car parts worth €52.8 billion (approximately $56.5 billion USD) and steel and aluminum worth €24 billion (approximately $25.7 billion USD) to the United States.

Germany,Italy,and France,the EU’s three largest economies,are the primary exporters of these goods. The EU believes that reducing tariffs on these items would substantially benefit European industries.

Potential for a Trade War Looms

The US has threatened to impose tariffs of up to 50% on European imports if no agreement is reached by July 9th. In response, the EU has prepared a list of countermeasures, including duties on $22.4 billion USD worth of US goods. These retaliatory tariffs would target politically sensitive US sectors,including agricultural products,poultry,and motorcycles.

The EU has also prepared a secondary list of US products,valued at $101.8 billion USD, which could be subject to tariffs. This list includes industrial goods such as Boeing aircraft and bourbon, signaling the potential for a broad and damaging trade conflict.

Weakening Dollar Adds Complexity

The ongoing negotiations are taking place against the backdrop of a weakening US dollar, which has declined nearly 10% in the last three months. According to Capitalinked analyst Radim Dohnal, the weakening dollar acts as a de facto penalty on US imports. He also noted that increased defense spending by NATO states, much of which benefits the US economy, could create a scenario where both sides find common ground.

Pro tip: keep an eye on currency exchange rates, as they can significantly impact the competitiveness of exports and imports.

EU Prepares countermeasures

while aiming for a negotiated settlement, the EU is actively preparing countermeasures in case an agreement with the US is not reached.The Slovak Commissioner Maroš Šefčovič is scheduled to travel to Washington this week to continue negotiations [[1]].The EU has already approved duties on US goods worth €21 billion, which can be implemented quickly. These duties are strategically targeted at politically sensitive US states, focusing on agricultural products, poultry, and motorcycles.

A second list of US products, valued at €95 billion, is also ready. This list includes industrial goods, such as Boeing aircraft, cars, and bourbon, demonstrating the EU’s readiness to respond forcefully if necessary.

The Role of the European Commission

The European Commission, which sets trade policy for France and other EU countries [[2]], is leading the negotiations on behalf of the EU member states. The Commission faces a tight deadline to secure an agreement,with the threat of US tariffs looming large.

What are the long-term implications of a potential US-EU trade war? How can businesses prepare for the potential impact of new tariffs?

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