Trump’s 50% Tariff Threat Puts EU Under Immense Pressure

With only 48 hours remaining until President Trump’s July 9th deadline, the European Union is under intense pressure to finalize a trade deal with Washington, aiming to avert the re-imposition of steep tariffs. Trump’s administration has warned of import taxes as high as 50% on EU goods, and potentially up to 70% on others, creating significant economic instability. This uncertainty has already manifested in a pause in business investments globally and the dollar’s weakest performance in 50 years during the first half of the year. The EU faces a critical decision: push for a deal at any cost or risk a full-blown trade war.
US Treasury Secretary Scott Bessent indicated that negotiations continued over the weekend, focusing on a range of agreements with crucial partners. The aggressive stance of the Trump administration, evident in past remarks like calling the EU “nastier than China,” continues to shape the talks. A recent example of this pressure was the threat of a 17% tariff on EU food imports to Trade Commissioner Maroš Šefčovič during high-level discussions. The 90-day pause on “liberation day” tariffs, which began on April 2nd, is set to expire this Wednesday, with only two countries, the UK and Vietnam, having secured deals.
The looming deadline casts doubt on the EU’s ability to achieve more than a basic “political framework agreement” to extend negotiations, which would likely mean the continuation of existing 10% tariffs and other levies on key sectors like cars, steel, and aluminum. European industries are preparing for the financial implications, anticipating a minimum 10% tariff on exports to the US – five times higher than the pre-Trump average of 2%. This revised expectation comes after the EU acknowledged that a comprehensive trade deal is no longer a viable option.
Consequently, the EU is now pursuing an agreement in principle, a “framework deal” similar to the one recently enacted with the UK. While initially skeptical of the UK deal’s scope and WTO compliance, and banking on its greater economic clout (€1.6tn in transatlantic trade compared to the UK’s €363bn), EU diplomats now concede that a minimalist deal might be the most realistic outcome given the ticking clock.