EU still divided over Trump tariff response as deadline looms
Trade-off
The EU faces a key choice this week between swallowing higher tariffs to avoid a full-blown trade war with Washington, or retaliating to put pressure on the US to compromise, write Barbara Moens and Andy Bounds.
Context: Wednesday is the threatened deadline for a trade deal between the two trading giants, following almost three months of negotiations to avert Donald Trump’s threatened 50 per cent tariffs on goods from the EU next week.
Yesterday, US Treasury secretary Scott Bessent warned that US tariffs on imports from some countries will “boomerang” back to the steep levels set by Trump in April unless they quickly offer concessions and strike deals with Washington.
Ursula von der Leyen, the European Commission president, reached out to European leaders over the weekend to get guidance on whether she should accept a deal with some higher tariffs, which many favour, or raise the pressure on the US. The commission leads the trade negotiations on behalf of the bloc.
Last week, von der Leyen said she hoped for an agreement in principle that would allow the sides to keep negotiating a final deal.
With time running out, the bloc is still divided on the best strategy to deal with Trump. A number of countries, especially those that rely heavily on exports such as Ireland, Germany or Hungary, are in favour of a swift deal.
While the two sides talk, so-called sectoral tariffs of 25 per cent for cars and car parts, and 50 per cent for steel and aluminium, remain in place, as well as a 10 per cent tariff on most other imports.
German Chancellor Friedrich Merz, who is under pressure from German industry suffering from the measures, said last week that “it is better to reach a quick and simple solution than a long and complicated agreement that remains on the negotiating table for months”.
Other countries, including France and Spain, are sceptical about accepting a deal just for the sake of it.
They argue that the EU, with its 450mn consumers, should have the economic self-confidence to stand up to Trump and use its trade defence arsenal to hit back if Washington refuses to strike a fair deal.