Europe’s Tariff Gambit: EU Ready to Take 10% Hit to Avoid Worse

In a strategic gambit, Europe is reportedly prepared to accept a 10% tariff hit from the US as part of a “framework” trade deal. This move aims to prevent President Donald Trump’s more severe threat of 50% tariffs on all EU exports, with a crucial deadline looming next Wednesday. However, this acceptance is conditional, with the EU pushing for an extension of talks and relief from the 25% car tariff, which significantly impacts Germany.
US Treasury Secretary Scott Bessent offered a cautiously optimistic assessment after meeting with EU Trade Chief Maroš Šefčovič, hinting at the possibility of a deal. The intensity of negotiations will continue through Thursday afternoon with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, with officials expecting “diligent” work through the weekend to secure an agreement.
The urgency stems from President Donald Trump’s explicit threat to impose 50% tariffs on all EU goods by July 9th unless a deal is reached. This would represent a drastic increase from current tariff levels. German Chancellor Friedrich Merz has been a vocal advocate for a swift, simplified “agreement in principle,” prioritizing immediate tariff relief for businesses over detailed, prolonged negotiations.
A key EU demand in any agreement for extension is a “standstill clause,” guaranteeing no new tariffs during that period. While some sources are hopeful for a deal by Friday, potentially giving Trump a high-profile Independence Day announcement, challenges remain. Past talks reportedly involved a “massive tome” of US grievances, and the latest US proposal is said to lack details on American concessions, particularly on the EU’s “red lines” concerning strategic sectors, energy purchases, and regulatory non-trade barriers.