Donald Trump: US President announces letter on tariff agreement with EU

In the tariff dispute with several trading partners, US PresidentDonald Trump (79) has announced a letter to the EU and special tariffs for certain sectors. Asked by a journalist whether he was optimistic about a deal with the European Union, he said: "We're probably two days away from sending them a letter. We're in talks with them. I just want you to know that a letter means a deal."

Trump emphasized that EU Commission President Ursula von der Leyen (66) and "the entire group" were now treating the US well. "It's like a new world. (...) They were among the toughest we've had to deal with. In many ways, they were even worse than China," he said.

The US president wants to introduce extra tariffs on certain industry imports, independent of the European Union. For example, a 50 percent surcharge would be imposed on copper imports. He also envisions tariffs on pharmaceuticals, semiconductors, and "various other things."

Trump had already imposed particularly high tariffs of 25 percent and 50 percent, respectively, on imports of cars and car parts, as well as steel and aluminum. With his tariff policy, the Republican aims to correct alleged trade imbalances and encourage more production in the United States.

The fact that Trump now wants to send a letter to the European Union would be new: such a letter was not expected by the EU Commission until now.

According to Bernd Lange , Chairman of the European Parliament's Trade Committee, both sides are currently negotiating only a few pages. The proposed framework agreement is designed as a "relatively limited document"—currently, negotiations are on a text of approximately three pages, said the SPD European politician.

For example, it could generally stipulate that certain import volumes of cars could be agreed upon, which could then be traded duty-free or at a low tariff rate. Details would have to be worked out later. Lange also warned that the current "breathing space" must be used to find a comprehensive package solution for all existing and threatened tariffs.

The EU Commission considers the tariffs to be unjustified and incompatible with the rules of the World Trade Organization (WTO).

On Monday, Trump published more than a dozen letters with tariff regulations to various countries, primarily in Asia. He also postponed the deadline for new import surcharges by almost a month. The deadline was originally scheduled to expire this Wednesday (July 9). Now, new tariffs on exports from other countries to the US are to be imposed starting August 1.

The tariff dispute with the United States is already having negative effects: in May, German exports to the United States, the most important trading partner for German companies, fell to their lowest level in more than three years , according to data from the Federal Statistical Office.

In a scenario paper provided to the German Press Agency, trade expert Laura von Daniels (45) from the German Institute for International and Security Affairs (SWP) warns of the enormous potential for divisiveness in the tariff dispute between the US and the EU. The costs of US tariffs are unevenly distributed within the EU. Some members, such as Germany , Ireland , and Italy , are more export-oriented and therefore more severely affected. "If these countries were to be persuaded to enter into individual bilateral agreements with Trump, the strength of the single market would be reduced and the future of the EU threatened."

Trump will also not stop mixing economic and security policy in order to divide the EU, the expert writes. "While states on the eastern flank see a potential US withdrawal from Europe as an existential threat, other member states assess the security implications as less dramatic." This further weakens Europe's ability to respond to Trump's threats.

For example, in exchange for a quick "deal" with Trump, the EU could accept a general US import tariff of 10 percent on most goods. In return, the US government could offer fixed quotas for the duty-free import of certain goods, such as specific steel and aluminum products.

At the same time, the expert warns: "For the EU, there remains a considerable risk that a deal with Trump could only be of short duration." Further US tariffs on certain sectors are looming in the fall. Rather, an early deal would be an "economic ceasefire" that buys time and avoids the immediate high costs of an escalation.

In a second scenario, the expert estimates, negotiations will continue without a solution. Trump will put pressure on the EU with security policy provocations – a dispute over the appropriate negotiating tactics could bring the EU's initially unified stance to a standstill.

Finally, according to the third scenario, a full-scale trade and economic war could break out between the US and the EU, warns von Daniels. She does not rule out the possibility that Trump would then put pressure on NATO, for example, by withdrawing US troops from Europe on a much larger scale.