EU and US Nearing Trade Deal with 15% Tariffs
Transatlantic Negotiations Focus on Avoiding Broader Trade Chokehold
The European Union and the United States are reportedly close to finalizing a trade agreement that could see a 15% tariff imposed on European imports. This potential accord mirrors a recent deal struck by U.S. President Donald Trump with Japan.
EU Considers 15% Tariff as Gateway to Deal
Negotiators from the European Union are understood to be moving towards accepting a 15% U.S. import tariff. This concession is seen as the price for securing an agreement in ongoing trade discussions with Washington.
Current talks aim to finalize a deal with President **Donald Trump** to prevent significantly higher tariffs. Such increases could severely disrupt transatlantic trade flows.
Key Sectors May See Tariff Exemptions
The proposed agreement would involve the EU consenting to the 15% tariffs on goods destined for the U.S. market. Importantly, specific sectors of the European economy are anticipated to be exempt from these duties.
Spirits, aircraft, and certain medical devices are among the goods that might avoid U.S. import taxes. Officials in Brussels emphasize that many aspects of the negotiations remain fluid and require final approval from President Trump.
Deal’s Implication for National Budgets
Sources indicate an expectation for a 15% tariff on EU products, though a definitive agreement is not yet assured. The ongoing negotiations are described as extremely challenging. A 15% tariff could significantly impact national budgets, potentially dampening economic growth, affecting tax revenues, and straining public finances.
European businesses have already been subject to 10% tariffs since early April, with additional levies on steel products and automobiles exported to the U.S.
Past Setbacks and Future Contingencies
The European Commission, leading the negotiations, had previously believed a deal was imminent. However, progress was hampered when President Trump threatened to triple tariffs to 30% from August 1st, aiming to extract further concessions.
The 15% rate under consideration aligns with the tariff agreement previously reached between Washington and Tokyo. The United Kingdom has agreed to a 10% rate.
Pharmaceuticals and Retaliatory Measures
It remains uncertain whether the current discussions will address potential import taxes President Trump has proposed for pharmaceuticals. This sector represents a substantial portion of trade from Ireland to the U.S.
EU Trade Commissioner **Maros Sefcovic** recently conferred by phone with U.S. Commerce Secretary **Howard Lutnick**. Senior commission officials subsequently briefed diplomats in Brussels on the negotiation status.
One EU diplomat clarified that the 15% figure would represent the total tariff rate, encompassing existing U.S. import duties that predated President Trump’s term.
EU Prepares Counter-Tariffs
The European Commission is developing a range of retaliatory tariffs on U.S. goods should the current negotiation efforts fail. These counter-tariffs, potentially reaching 30%, could target approximately €90 billion of U.S. trade. Sectors like aviation, automobiles, steel, bourbon whiskey, farm produce, and various consumer goods would be affected.
EU member states are expected to approve these retaliatory measures today, which will be held in reserve while talks continue.
Government Financial Adjustments
Ministers **Paschal Donohoe** and **Jack Chambers** stated on Tuesday that they would adjust budgetary plans, including an additional €9.4 billion in spending, if the U.S. imposed higher tariffs. While infrastructure investment would be protected, current spending could be reduced, impacting welfare increases, public services, and tax cuts.
The U.S. has maintained significant tariffs on various global goods. For instance, in 2023, the U.S. imported approximately $2.1 trillion in goods, with tariffs contributing to government revenue (U.S. Census Bureau).
