AsianFin -- U.S. President Donald Trump is taking a tougher stance during trade negotiations with the European Union, a report on Friday suggested.
Credit：China Central Television
Trump is pushing for a minimum tariff of 15% to 20% in talks with the EU, the Financial Time (FT) reported. The Trump administration is now looking at a reciprocal tariff rate that exceeds 10% even though Washington and Brussels can reach a deal, the report cited a U.S. official.
The reported tariff range indicated Trump prefers reciprocal tariffs on the EU as high as they were when trade negotiations started in April. Either 15% or 20% is higher than the current baseline 10% tariffs that Trump imposed on worldwide trading partners, and the president has threatened the EU would face higher reciprocal tariffs from next month if no deal reached by August 1.
Trump on Saturday released his letter to Ursula von der Leyen, president of the European Commission, dictating new tariffs on the EU exports starting August 1. Just like letters Trump sent to leaders of more than 20 countries, the president said the new tariffs would separate from sectoral tariffs, warning them not to retaliate, urging them to relocate companies to the United States, and suggesting that the tariff rates could be adjusted if they cooperate.
It was reported on Friday that Trump has been unmoved by the latest EU offer to reduce car tariffs, and would stick to duties on the sector at 25%. That stance, if it is accurate, dampened the latest EU efforts to mitigate the tariffs shaking its auto industry.
The EU has dropped the idea of a “netting mechanism” proposed by Germany automakers and reverted to offer the tit-for-tat tariffs on cars, FT reported on Thursday. Under the reported proposal from EU negotiators, the bloc would roll back its 10% duties on U.S. car exports if Washington cut its levies on the sector below 20%.
German Chancellor Friedrich Merz on Friday warned the U.S. is still sceptical about offers to lower the sectoral tariffs. “Whether we can still create sectoral rule, whether we treat indicidual sectors differently from others, is an open question. The European side supports this. The American side views it more critically,” Merz said.
Trump’s insisting on permanent reciprocal tariffs of 15% to 20% could push the EU towards retaliation, FT cited a senior European diplomat the same day. Another EU diplomat said “the mood has clearly changed” in favor of retaliation. These diplomats said Brussels will not settle at 15%, per the report.
EU trade ministers agreed on Monday that Trump’s new threat of 30% tariffs was “absolutely unacceptable” after a meeting in Brussels. The EU’s trade chief Maros Sefcovic said the European Commission was sharing proposals with the 27 member states for the second list of goods accounting of some €72 billion euros ($84 billion) worth of U.S imports.
The EU has finalized a second list of countermeasures to target American goods worth €72 billion, including Boeing Co. aircraft, automobiles, bourbon, machinery products, chemicals and plastics, medical devices, electrical equipment, wines and other agricultural goods if it decides to retaliate against new U.S. tariffs, Bloomberg later Monday cited a 206-page list prepared by the European Commission.
A growing number of the EU members want the bloc to activate its Anti-Coercion Instrument (ACI) against the U.S. if an acceptable agreement is not struck by August 1 and Trump starts levying 30% tariffs, Bloomberg reported on Wednesday. More than half a dozen European capitals are in favor of the proposal for deployment of the ACI tool, led by Frence, the report quoted people familiar with the matter. Several member states are more cautious, while others have not expressed their position, per the report.
The European Commission is weighing a new round of retaliatory measures against tariffs imposed by the United States that would restrict the county’s services and procurement, the Politico reported on Thursday. “It’s clear they need to start looking at services as we have more or less exhausted ourselves on goods. And if Trump comes with more bombshells like pharma and semiconductors, we need to have something to hand,” the report quoted a EU diplomat.
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