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The EU is pushing for a UK-style trade deal with the US that leaves some tariffs in place after next month’s deadline, further delaying retaliation against Washington.
Michael Clauss, adviser to German Chancellor Friedrich Merz, told an FT Live event in Berlin on Thursday that instead of a full deal by July 9, he expected “a declaration saying: ‘OK, this is a little bit along the model of the US-UK [agreement]’.”
“First, they want to see if there is a landing zone on the so-called reciprocal tariffs of 10 per cent . . . in order then to move on to the other tariffs, the sectoral tariffs,” Clauss said of the European Commission, which is leading the talks with Washington.
Diplomats and officials briefed on the matter say that early talk in Brussels of retaliatory levies if US President Donald Trump did not lift all measures against EU countries has diminished as governments in the bloc fear the economic consequences, and the risk of European internal disagreement on taking countermeasures.
Some countries, led by France, want to hit back in kind in that scenario, but others, including Italy and Hungary, want to keep talking, spooked by Trump’s threat to impose 200 per cent tariffs on wine and whiskey when the EU proposed targeting bourbon in April.
The 27-member EU, which is far bigger than the UK, had been holding out for a better deal than the one negotiated by Sir Keir Starmer’s government in London. But a 10 per cent reciprocal duty, combined with lower tariff quotas in areas such as steel and cars, would find grudging acceptance among some EU countries, diplomats said.
“I think it’s doable,” said Clauss. “But is it going to happen? I think it’s too early to say.”
Trump has threatened that without a deal, “reciprocal tariffs” would rise to 50 per cent.
Talks would then continue to get reduced rate quotas for sensitive products such as steel and cars. They would also cover sectors such as semiconductors and pharmaceuticals, where Trump has threatened to impose levies.
EU trade commissioner Maroš Šefčovič is handling the sectoral tariffs with Howard Lutnick, US commerce secretary, while EU officials talk to the US Trade Representative’s office (USTR) on other areas.
The US is no longer pressing demands that the EU abolish value added tax but is still seeking the end of national digital services taxes, according to a senior official involved in the talks.
It also wants the EU to remove other “non-tariff barriers” such as locally made television programme quotas and bans on some US foods such as chlorine-washed chicken.
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But diplomats noted that the UK successfully resisted US pressure to scrap its digital tax, VAT, and accept American food and product safety standards.
London did drop tariffs on US beef and ethanol.
The EU is offering to buy more liquefied natural gas and weaponry to reduce the €198bn annual trade surplus it has in goods with the US.
If there is no deal, the European Commission, which runs trade policy, must get the approval of a weighted majority of member states to retaliate. Officials said they were wary of reacting without strong support, as they needed to show unity to force the US to compromise.
All members except Hungary backed a package of tariffs of up to 50 per cent on €21bn of goods in April, but it was postponed until July 14 to allow time for talks.
The move was in response only to Trump’s 25 per cent tariffs on steel and aluminium, which have since been raised to 50 per cent.
Additional reporting by Aime Williams in Washington
