The US and EU have begun serious trade talks to head off the worst of Donald Trump’s tariffs, breaking a deadlock that left the bloc near the back of a queue to negotiate with Donald Trump’s team.
The two sides have in recent days exchanged negotiating documents for the first time, outlining areas of discussion ranging from tariffs to digital trade and investment opportunities, according to four people familiar with the matter and an EU briefing note.
Sabine Weyand, the European Commission’s top trade official, told member state ambassadors the bloc still had to act calmly and not succumb to the US desire for “quick wins”, the briefing note said. She warned that some US tariffs would probably remain, especially on sectors the US wished to reshore, such as steel and car manufacturing.
The 27-member EU, which Mr Trump has accused of “ripping off” the US, has so far not been able to make as much progress with US officials as countries such as Japan, South Korea, Vietnam and the UK.
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Jamieson Greer, Mr Trump’s trade representative, helped to force the pace when he privately warned European diplomats that US officials were growing increasingly frustrated at the bloc’s refusal to provide any proposals in writing, according to two people familiar with the discussions.
Without an initial move from Brussels, he said the EU should expect Mr Trump to reapply his April 2nd tariffs in full. The EU’s 20 per cent “reciprocal” tariff has been halved until July 8th to allow for negotiations. Mr Trump has maintained additional 25 per cent levies on steel, aluminium and cars and threats of more to come on pharmaceuticals, semiconductors, copper, lumber, critical minerals and aerospace parts.
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Maroš Šefčovič, EU trade commissioner, spoke to Mr Greer on Thursday and said he hoped to meet him next month at an OECD ministerial meeting in Paris.
Mr Šefčovič has told the FT that he wanted to cut the US-EU trade deficit by buying more US gas, weapons and agricultural products. However, the US has repeatedly raised concerns about Europe’s value added tax, digital services regulations, food standards and tariffs on certain US goods.
Daniel Mullaney, who was formerly the US’s chief trade negotiator with the EU, said the US would be likely to focus on pharmaceutical regulations and on opening up Europe to US agricultural products in the forthcoming talks.
EU trade ministers made it clear that the recent US-UK agreement, which left 10 per cent tariffs in place, was not a template for the bloc.
Benjamin Dousa, Swedish trade minister, said: “We will not be happy with that kind of deal” and the US should “expect countermeasures”. One EU official said: “10 per cent is not a deal”.
The EU paused its €21 billion in retaliatory tariffs because of the talks, but the commission last week proposed another €95 billion package including Boeing aircraft, cars and bourbon whiskey.
Mr Šefčovič has also said the EU will not accept US demands to scrap VAT or weaken digital regulations and taxes.
However, the bloc is open to reduce its dependence on China for critical raw materials and medicines, and erect tariffs against allegedly subsidised Chinese exports.
Ms Weyand, who visited Washington in early May, said that the UK deal showed that the US wanted to use agreements to control supply chains and squeeze out Chinese products, according to the EU document. – Copyright The Financial Times Limited
