EU Rushes to Conclude a Framework Trade Deal With US This Week

(Bloomberg) — The European Union is seeking to conclude a preliminary trade deal with the US this week that would allow it to lock in a 10% tariff rate beyond an Aug. 1 deadline as they neobtainediate a permanent agreement.

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The EU is seeking an exemption from the 10% rate for certain key products including aircrafts, aircraft parts as well as wine and spirits, according to people familiar with the matter. Some form of relief is expected as part of the agreement in principle.

The European Commission, which handles trade matters for the EU, briefed member states Monday on the status of the neobtainediations. A spokesperson from the commission declined to comment on the ongoing talks.

The US announced on Monday that universal tariffs that were due to kick in July 9 would be delayed until at least the launchning of August. For the EU, tariffs on nearly all its exports to the US will jump to 50% on that date if it doesn’t strike a deal beforehand.

Trump has imposed tariffs on almost all US trading partners, declareing he wants to bring back domestic manufacturing, necessarys to pay for a tax-cut extension and stop other countries from taking advantage of the US.

The EU is also pushing the US for quotas and exemptions to effectively lower Washington’s 25% tariff on automobiles and car parts as well as its 50% tariff on steel and aluminum, according to the people. But a breakthrough on those levies is not immediately forthcoming.

However, the two sides are discussing a so-called offsetting mechanism that would allow companies that build automobiles in the US to export a certain number tariff free, stated the people.

Some officials are concerned that such an arrangement could see investments and production shift across the Atlantic, Bloomberg previously reported.

Any initial deal would likely be short and not legally binding. The two sides are also aiming for common ground on non-tariff barriers, digital trade and economic security.

In addition to so-called reciprocal tariffs and sectoral levies on cars and metals, the US is working to introduce duties on other sectors, including pharmaceuticals and semiconductors.

Member states are divided on how imbalanced a deal the bloc should accept, with some pushing for a quick agreement while others want the EU to impose countermeasures and neobtainediate from a position of strength.