Customs duties: Europe and the United States would move towards an agreement of 15% on most products

The unpredictable nature of Donald Trump, who will be responsible for validating the final agreement, calls for caution. But diplomatic sources cited by Reuters and Bloomberg on Wednesday, July 23, are optimistic about an imminent outcome to the tariff negotiations taking place between the United States and the European Union. Member states are reportedly willing to accept 15% tariffs on most products, and EU officials are insisting that this duty also cover sectors such as automobiles, the diplomats said. Steel and aluminum imports exceeding a certain quota would be subject to 50% tariffs, according to the same sources.

With one week to go before the deadline, the EU is struggling to reach an agreement with the Americans, and the negotiations are looking like a roller coaster. Donald Trump surprised the Europeans on July 12 by decreeing 30% tariffs on all imports from the EU starting August 1. Europe still hopes to find a negotiated solution, but has listed American goods worth nearly €100 billion to be taxed starting August 7 if talks fail.

Dispatched by Brussels to negotiate with the Americans, European Trade Commissioner Maros Sefcovic has traveled to Washington several times and regularly communicates with Howard Lutnick and Jamieson Greer, his counterparts in the Trump administration. He was scheduled to meet with Howard Lutnick again on Wednesday afternoon. Donald Trump and the head of the European executive, Ursula von der Leyen, have had more sporadic contacts, including a telephone conversation on July 6.

European officials initially hoped to reach an agreement maintaining a 10% base tariff on European products, with exemptions for strategic sectors such as aeronautics. But Trump rejected the draft agreement, and US negotiators are now proposing a 15% base tariff, according to European sources. Average tariffs on both sides of the Atlantic stood at around 1% before Donald Trump returned to the White House in January, according to Brussels.

Few details have leaked from the talks. Trump insists he wants to eliminate the US trade deficit with the EU in goods. In particular, he is pushing the Old Continent to buy more American liquefied natural gas (LNG). His team also regularly attacks so-called "non-tariff" barriers in force in the EU: health regulations, environmental standards, exchange rate policies, and tax measures such as VAT. Brussels categorically refuses to abandon some of these measures. Nor does its powerful digital laws, which are regularly criticized by tech giants.

The EU is desperate to lower the temperature and avoid massive tariffs that would harm its economy, which has been mired in near stagnation since late 2022. Brussels had proposed a total and reciprocal tariff exemption for industrial products, including cars. But Trump deemed this offer insufficient.

The EU is also preparing countermeasures in case the negotiations fail. It says it is prepared to impose tariffs worth some €100 billion in American goods, including planes, cars, and bourbon. The EU is also considering targeting American services, including technology and financial services. If the negotiations fail, European unity will be put to the test.

France is pushing Brussels to take a firm stance, even deploying its most powerful trade tool, the "anti-coercion instrument," if negotiations with the United States fail. Nicknamed the "bazooka," this tool was designed as a deterrent to be activated after diplomatic avenues have been exhausted. It would, in particular, allow for the freezing of access to European public procurement markets or the blocking of certain investments, but would require several months to enter into force. Other countries, such as Ireland, whose economy is heavily dependent on American investment, are arguing, on the contrary, for the avoidance of such a confrontation.