EU Preparing to Accept Universal US Tariff, Seeks Key Exemptions

The EU is prepared to accept a universal tariff imposed by the US, but is seeking key exemptions. The only daily news program focused on technology, innovation, and the future of business from San Francisco. Hosted by Emily Chang.

The European Union (EU) has expressed its willingness to accept a 10% universal tariff on many of its exports to the United States, but it is pushing for lower rates or exemptions in key sectors including pharmaceuticals, alcohol, semiconductors, and commercial aircraft. This decision comes ahead of a July 9 deadline set by U.S. President Donald Trump, after which tariffs on nearly all EU exports could jump to 50% [1].

The EU, which oversees trade policy for the bloc, considers the proposal to slightly favor the U.S. but feels it is potentially acceptable if critical sectoral concerns are addressed. The bloc is also reportedly seeking exemptions from the present U.S. tariffs, which stand at 25% for vehicles and vehicle parts, and 50% for steel and aluminum materials [1].

EU Trade Commissioner Maros Sefcovic is reportedly in Washington this week to lead a delegation seeking an interim agreement that would keep negotiations on track and avert a significant increase in tariffs. The U.S. has submitted a proposal covering tariff and non-tariff barriers, as well as strategic cooperation, though full details have not yet been shared with EU member states [1].

The EU has approved retaliatory tariffs on 21 billion euros of U.S. goods, with an additional 95 billion euros list prepared. Targets include Boeing aircraft, bourbon, soybeans, and U.S.-made vehicles. The bloc is also considering non-tariff responses such as export controls and procurement restrictions should talks fail [1].

Officials reportedly outlined four scenarios: a balanced deal, an unacceptable U.S. offer, a deadline extension, or Trump exiting talks and raising tariffs. In case of the last scenario, the EU would likely retaliate with all options [1].

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, is up 5.7% year-to-date, while the Invesco QQQ Trust, Series 1 (QQQ), which tracks the Nasdaq-100, has gained 8.1%. The SPDR Dow Jones Industrial Average ETF Trust (DIA) is also up 4% this year. Meanwhile, the iShares Europe ETF (IEV) is up 21.9% so far this year [1].

On Stocktwits, retail sentiment was ‘neutral’ for SPY, ‘extremely bearish’ for QQQ, and ‘bullish’ for both DIA and IEV; message volume was ‘normal’ across all ETFs, except for DIA, which saw ‘high’ activity [1].

President Trump's self-imposed July 9 deadline on tariffs is fast approaching, with the president and top administration officials providing mixed signals on its malleability while countries race to finalize talks. Trump said Sunday that he didn't think he'd "need to" extend that deadline, while Treasury Secretary Scott Bessent on Monday warned "recalcitrant" countries that a return to steep "Liberation Day" tariffs looms [3].

The European Union signaled it was willing to accept a 10% universal tariff on many of its exports but is seeking exemptions for pharmaceuticals, alcohol, semiconductors, and commercial aircraft as part of a trade deal, Bloomberg reported. The EU is also seeking quotas and exemptions to lower duties on autos, steel, and aluminum, the report said [3].

Canada scrapped its digital services tax on U.S. technology companies, such as Apple (AAPL), Amazon (AMZN), and Alphabet (GOOG, GOOGL) late on Sunday, just hours before it was set to start. The White House said trade talks between the two countries had resumed after Trump threatened to cut off trade talks [3].

The situation has become quite complex, with member states divided on various major approaches forward through several key diplomatic frameworks. European Commission President Ursula von der Leyen is analyzing these terms while also preparing EU retaliation tariffs on $95 billion worth of U.S. goods [4].

The 50% steel tariff threat has revolutionized rapid decision-making on whether to accept unfavorable US-EU trade deal terms or face comprehensive retaliation across numerous significant trade channels [4].

References:
[1] https://stocktwits.com/news-articles/markets/equity/eu-willing-to-accept-10-tariff-deal-but-wants-us-to-cut-rates-on-key-exports/chFgUUDRRiQ
[2] https://www.forexfactory.com/news/1349038-eu-to-accept-trumps-universal-tariff-but-seeks
[3] https://finance.yahoo.com/news/live/trump-tariffs-live-updates-canada-scraps-tech-tax-that-infuriated-trump-bessent-warns-on-july-9-deadline-200619475.html
[4] https://watcher.guru/news/50-steel-tariff-threat-eu-scrambles-for-last-minute-us-deal