Trump and trade challenges between the EU and the US

What can the EU learn from the agreement between China, the United Kingdom and the US?

To avoid the introduction of 20 percent tariffs on transatlantic exports, the European Union has decided to « intensify » trade negotiations with the United States.

EU Commissioner Maros Shefçovic announced last Thursday on the margins of a meeting of EU trade ministers in Brussels that he will meet with his US counterpart, Howard Latnick.

If no agreement is reached by early July, 20 percent tariffs-US President Donald Trump temporarily suspended for 90 days-will take effect. Apparently, the EU will also avenge the US imports.

Washington and Beijing temporarily each other’s fees from mid-May-the US reduced fees for Chinese imports from 145 to 30 percent, while China reduced its penalty fees from 125 to 10 percent. These measures came into force on May 14, 2025 and are valid for 90 days. During this period the parties will continue negotiations on a long -term agreement.

A few days ago, Trump announced the first draft of a trade agreement with the UK. The deal provides for a decrease in tariffs for British car exports to the US and easier access to US exporters – including farmers and ethanol producers – in the British market.

Trump under pressure

Although Trump continues to maintain a rigid attitude towards Brussels and recently stated that « Europe is worse than China in many respects », Andrew Cunningham, chief economist for Europe at the Capital Economics Research Center, believes economic pressure will prevent it from reacting to a conflict with the EU.

« These two new agreements encourage European negotiators to adhere to the existing strategy: avoiding escalation, the threat of countermeasures and the willingness to engage in dialogue, » Kenningham told DW.

However, Capital Economics recently warned that an EU-US deal would be difficult to achieve, citing Europe’s great trade surplus and the challenge of achieving consensus among the 27 EU members.

The EU has already threatened with opponents of US goods worth 95 billion euros (about $ 107 billion) in response to Trump’s tariffs on aluminum, steel and European cars. But pushed the measures to continue negotiations. Brussels is also examining restrictions on steel and chemical exports to the US.

Unclear US requests

Claudia Schmucker from the German Council for Foreign Relations (DGAP) believes that agreements with China and the UK will not radically change the situation: « Trump still expects the EU to offer something he considers valuable, » Schmucker told DW.

The EU has so far offered the growth of American Natural Gas (LNG) imports, advanced artificial intelligence technology (IA) and soybeans, along with a proposal to mutually eliminate tariffs for industrial goods. However, Brussels refuses to make concessions on other controversial issues, such as value added taxes (VAT) and regulatory standards that Trump sees as unfair.

Last year, the US had a trade deficit with the EU worth $ 235.6 billion (210 billion euros), which is an increase of nearly 13 percent compared to last year. Eurostat data for 2023 shows that the EU reached a trade surplus of € 157 billion in trade with the US.

Little hope for a quick deal

Swedish Trade Minister Benjamin Dousa said he does not believe in a close agreement with the US. If Trump holds the 10 percent basic tariff that recently decided on Britain imports, the EU may retaliate with countermeasures, he warned.

Miguel Otero, an international political economy expert at the Royal ELCANO Institute of Spain, estimates that the US may lose a lot due to Trump’s wrong steps: “The EU has a deficit in services, especially in finances, digital technology and platforms entertainment. China. ”

Despite the surplus of European Union goods, the European market accounts for 25 percent of all US services exports last year, worth $ 275 billion. Including Switzerland and Britain, this percentage increases to 42 percent.

The European Commission is preparing to launch procedures in front of the World Trade Organization (WTO) against Trump’s « reciprocal » tariffs on cars and spare parts. The deadline for the agreement expires on July 8-then the 90-day holiday ends in the implementation of the announced tariffs.

Capital Economics predicts that Trump will prolong the pause, but that it can lead the negotiations on the verge of collapse in order to continue pressure on negotiating partners. Capital Economics warned of a new « hot point » in the coming months. This can cause unexpected shock in the financial markets.

German Economy Minister Katerina Reiche has recently been more optimistic and has emphasized the important role of the United States as a trade partner for the European Union. « A solution is needed because in the event of escalation there is no winner, » she said.