EU Proposes 10% Tariff on Exports to US in Trade Talks

The European Union has expressed openness to a trade agreement with the United States that includes a 10% universal tariff on various exports, contingent on Washington's agreement to reduce duties on key sectors such as pharmaceuticals, semiconductors, alcohol, and commercial aircraft. This proposal comes as both sides intensify efforts to reach an interim deal before a looming July 9 deadline, which could see the US impose a blanket 50% levy on nearly all EU exports, triggering EU countermeasures.

According to sources familiar with the matter, the EU is also advocating for exemptions or quotas to mitigate the impact of steep US tariffs, including a 25% duty on automobiles and car parts and a 50% levy on steel and aluminum. While the European Commission views the proposal as slightly favoring US interests, officials maintain that it is still within the bounds of a possible agreement. President Donald Trump has defended the sweeping tariffs as part of his strategy to restore domestic manufacturing, fund extended tax cuts, and deter trade practices he claims disadvantage the US.

At a recent summit in Brussels, European Union leaders discussed new proposals from the United States on a trade deal. Commission President Ursula von der Leyen did not rule out the possibility of tariff talks failing, stating that “all options remain on the table.” Meanwhile, German Chancellor Friedrich Merz urged the EU to pursue a “quick and simple” trade deal rather than a “slow and complicated” one. French President Emmanuel Macron, while also advocating for a swift and pragmatic agreement, emphasized that his country would not accept terms that were not balanced.

EU Trade Commissioner Maros Sefcovic will lead a delegation to Washington this week to advance the talks. Sources indicate that both sides are optimistic about reaching a provisional deal to allow negotiations to continue beyond the deadline. The framework of this deal would encompass tariff and non-tariff issues, purchases of key American goods, and future areas of cooperation. The EU aims to ensure that any interim deal addresses existing tariffs and new levies the US might impose, and seeks to cut non-tariff barriers through its simplification agenda. The bloc is also open to broader collaboration with the US on economic security challenges.

According to EU estimates, the US currently imposes duties on about €380 billion worth of EU goods, covering roughly 70% of the bloc’s exports. On Monday, the European Commission notified member states of a proposal submitted by the US on tariffs, trade barriers, and strategic cooperation, although detailed terms have not been disclosed. Officials have outlined four possible outcomes as the deadline nears: a mutually acceptable deal with some asymmetry, a one-sided US offer that the European Union would reject, an extension of the deadline to continue negotiations, or US withdrawal from talks, triggering tariff hikes.

In preparation for a potential breakdown in negotiations, the EU has prepared retaliatory tariffs on €21 billion worth of US goods, targeting politically sensitive sectors including soybeans, poultry, motorcycles, and other agricultural exports. A second list of €95 billion in tariffs is also ready, which includes industrial goods such as Boeing aircraft, US-made cars, and bourbon. Beyond tariffs, the EU is consulting member states on strategic responses that may involve export controls and procurement restrictions, aimed at sectors where the US particularly relies on European inputs. While EU officials are aiming for a balanced outcome, they remain cautious, evaluating any final deal to determine the level of imbalance the bloc is prepared to accept.