The United States has indicated that it would not relax its deadline of Aug 1 for increased tariffs on the European Union as the bloc tries to reach an agreement in time.
While cautioning that the date for a baseline 30 percent export tariff is set, US Commerce Secretary Howard Lutnick expressed confidence over the weekend that a trade agreement could be reached with the EU.
When questioned about the deadline for his EU tariffs on CBS News‘ “Face the Nation” on Sunday, Lutnick responded by saying, “That’s a hard deadline, so on Aug. 1 the new tariff rates will come in.”
“These are the two biggest trading partners in the world, talking to each other. We’ll get a deal done. I am confident we’ll get a deal done,” he said, hinting that negotiations might go on after the date.
He added that nothing will stop countries from talking to them after Aug. 1 deadline, “but they’re going to start paying the tariffs on Aug. 1.”
If punitive trade tariffs are imposed, the EU has stated that it is preparing retaliatory measures against the US. However, Lutnick rejected the idea that the EU would target products like Kentucky bourbon and aircrafts and said that “they’re just not going to do that.”
The EU is aiming to negotiate a reduced tariff rate in the final negotiations to secure a trade deal. As the first nation to sign a trade deal with the US, the bloc had intended to reach a similar arrangement. A 10 percent baseline tariff with some restrictions on imports of steel, cars, and aerospace is part of that agreement.
However, experts and economists are skeptical that Brussels can reach a consensus on a similar framework.
The EU’s relationship with US President Donald Trump is far more complex than that of the United Kingdom. The EU disputes Trump’s repeated complaints about unfair trade practices and an imbalanced trade relationship.
The European Council estimates that in 2024, the overall trade between the US and the EU was 1.68 trillion euros ($1.96 trillion). The EU has a trade deficit in services but a surplus in products. Including both goods and services, the bloc’s overall surplus last year was over 50 billion euros.
Financial Times reported on Friday that Trump was pushing for any agreement with the EU include a minimum tariff of 15 percent to 20 percent on imports. According to reports, the president was also pleased to maintain 25 percent tariffs on the auto industry, a decision that would be especially detrimental to German auto exports.
All EU member states, except for Hungary, whose leader, Viktor Orban, is a supporter of Trump, have shown a change in attitude towards the bloc’s possible response, an EU official told CNBC.
Levies on US imports worth 21 billion euros are among the bloc’s possible countermeasures against the US; they are presently on hold until Aug 6. A second wave of potential tariffs amounting to 72 billion euros has also been drawn up by the European Commission.
The imports that may be impacted include clothing, food and drink, and agricultural products.
Meanwhile, a growing number of EU member states have indicated their support for the bloc’s use of its anti-coercion tool, reports from Bloomberg and The Wall Street Journal stated. The European Commission would have extensive authority to retaliate against the US using this, the EU’s most powerful trade tool.
Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux, praised the EU’s efforts to find a consensus on tariff policy, stating that the bloc was finally showing its strength.
“They’ve been very, very, I would say, cool, with the U.S. so far, and now that we’re approaching the deadline, they have to sound a bit more aggressive. Not getting a better deal than the U.K. is … an issue for the EU, and they have to prove that the whole structure of the EU is helpful,” he said.