EU still believes in agreement with the US by the 9th and with tariffs below 10%

The US administration has once again extended the deadline for the entry into force of the reciprocal tariffs announced on April 2, despite denying that this is an extension, casting further doubt on the state of international trade but also giving key players, such as the EU and Japan, more time to reach agreements with the US. On the European side, the hope is that there will be a principle of understanding with the Americans on Wednesday, respecting the initial deadline, and that tariffs could even be below 10%, at least for some sectors.

Trump’s recent announcement and subsequent comments from his Treasury Secretary Scott Bessent about the entry into force of the tariffs suspended nearly 90 days ago have created more confusion than clarity, with the new deadline now appearing to be August 1, although Bessent dismissed the idea as “an extension.” Whatever the US administration meant by this move, the Commission says it is ready to reach a deal in principle by Wednesday.

“We are working towards the 9th as the date when we want to have a minimum agreement in principle with the US,” Olof Gill, the Commission’s trade spokesman, said on Monday. “As I understand it, the US is saying that in the absence of an agreement by the 9th, […] there would be tariffs in place on August 1. So we are still working towards the 9th,” he added.

If there is no agreement between the two Atlantic blocs, Trump has already announced that he will revert the tariffs to the levels they were at when they were suspended. For Europe, this would mean a universal rate of 10%, 25% on cars and components, 50% on steel and aluminium and a 'reciprocal' tariff of 50%, a considerable increase in relation to the 20% initially announced on 2 April.

The Europeans' initial aim was to reach a comprehensive agreement with their US counterparts that would protect key sectors, but EU officials themselves admitted last week that this does not seem feasible. Instead, the idea is to secure an agreement in principle that limits tariff escalation, similar to the one reached between the US and the UK in May.

This idea resonates in countries that are highly dependent on exports to the US market, such as Germany and Ireland. Last week, German Chancellor Friedrich Merz called for “an easy and quick solution”, signalling the government’s urgency in seeing this issue addressed.

Conversely, countries such as Spain and France oppose agreements of this nature, arguing that the European bloc has the scale and weapons to face the threats from the US administration, reports the 'Financial Times'.

Here, Miranda Sarmento spoke about the possibility of an agreement that benefits both blocs and minimizes the distortions created by these barriers to entry, projecting that an understanding between the two Atlantic economic giants is close to being reached.

“It is possible to reach an agreement with very low tariffs, which is seen as beneficial for both parties and which allows us to continue to trade and create value for our citizens,” he told Bloomberg on Monday, the day after it became known that the tariffs will come into effect on August 1, if no understanding is reached with the Trump administration.

“If the terms of the agreement are not favourable to the EU, there is no agreement”, he countered, arguing that, if there is no agreement, Europeans should retaliate “not with full force, but selectively”.

Although there were already agreements with the United Kingdom and Vietnam, these two countries were in more favourable positions, in the first case, and more dramatic, in the second, than Europe in its relationship with the USA – which helps to explain the greater ease in reaching an agreement.

The UK has a chronic trade deficit in goods with the US, which is why Trump, in his worldview, classifies the British as one of the 'good' business partners. Even so, not even London escaped the universal 10% tariff, a fitting sign of the minimum that the Trump administration will seek to define in these talks with the various threatened countries.

Vietnam, on the other hand, has unusually high exposure to the US market, so the threat of 46% tariffs, one of the highest levels suggested by Trump on April 2, would be highly penalising for the small Asian country. The country has therefore agreed to see its exports to the US pay a 20% tariff and has assured Washington that it will increase efforts to prevent Chinese goods from being sent to the US via its country.