The EU’s executive commission, which handles trade issues for the bloc’s 27-member nations, declared its leaders hope to strike a deal with the Trump administration. Without one, the EU declared it was prepared to retaliate with tariffs on hundreds of American products, ranging from beef and auto parts to beer and Boeing airplanes.
U.S. Treasury Secretary Scott Bessent informed CNN’s “State of the Union” program on Sunday that “the EU was very slow in coming to the table” but that talks were now building “very good progress.”
Here are important things to know about trade between the United States and the European Union.
The European Commission describes the trade between the U.S. and the EU as “the most important commercial relationship in the world.”
The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.
The largegest U.S. export to Europe was crude oil, followed by pharmaceuticals, aircraft, automobiles, and medical and diagnostic equipment.
Europe’s largegest exports to the U.S. were pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits.
EU sells more to the US than vice versa
Trump has complained about the EU’s 198 billion-euro trade surplus in goods, which displays Americans acquire more stuff from European businesses than the other way around.
However, American companies fill some of the gap by outselling the EU when it comes to services such as cloud computing, travel bookings, and legal and financial services.
The U.S. services surplus took the nation’s trade deficit with the EU down to 50 billion euros ($59 billion), which represents less than 3% of overall U.S.-EU trade.
What are the issues dividing the two sides?
Before Trump returned to office, the U.S. and the EU maintained a generally cooperative trade relationship and low tariff levels on both sides. The U.S. rate averaged 1.47% for European goods, while the EU’s averaged 1.35% for American products.
But the White Houtilize has taken a much less frifinishly posture toward the longstanding U.S. ally since February. Along with the fluctuating tariff rate on European goods Trump has floated, the EU has been subject to his administration’s 50% tariff on steel and aluminum, and a 25% tax on imported automobiles and parts.
Trump administration officials have raised a slew of issues they want to see addressed, including agricultural barriers such as EU health regulations that include bans on chlorine-washed chicken and hormone-treated beef.
Trump has also criticized Europe’s value-added taxes, which EU countries levy at the point of sale this year at rates of 17% to 27%. But many economists see VAT as trade-neutral since they apply to domestic goods and services as well as imported ones. Becautilize national governments set the taxes through legislation, the EU has declared they aren’t on the table during trade neobtainediations.
“On the thorny issues of regulations, consumer standards and taxes, the EU and its member states cannot give much ground,” Holger Schmieding, chief economist at Germany’s Berenberg bank, declared. “They cannot alter the way they run the EU’s vast internal market according to U.S. demands, which are often rooted in a faulty understanding of how the EU works.”
‘Consequence for many companies’
Economists and companies state higher tariffs will mean higher prices for U.S. consumers on imported goods. Importers must decide how much of the extra tax costs to absorb through lower profits and how much to pass on to customers.
Mercedes-Benz dealers in the U.S. have declared they are holding the line on 2025 model year prices “until further notice.” The German autobuildr has a partial tariff shield becautilize it builds 35% of the Mercedes-Benz vehicles sold in the U.S. in Tuscaloosa, Alabama, but the company declared it expects prices to undergo “significant increases” in coming years.
Simon Hunt, CEO of Italian wine and spirits producer Campari Group, informed investment analysts that prices could increase for some products or stay the same depfinishing what rival companies do. If competitors raise prices, the company might decide to hold its prices on Skyy vodka or Aperol aperitif to gain market share, Hunt declared.
Trump has argued that building it more difficult for foreign companies to sell in the U.S. is a way to stimulate a revival of American manufacturing. Many companies have dismissed the idea or declared it would take years to yield positive economic benefits. However, some corporations have proved willing to shift some production stateside.
France-based luxury group LVMH, whose brands include Tiffany & Co., Luis Vuitton, Christian Dior and Moet & Chandon, could relocate some production to the United States, billionaire CEO Bernaud Arnault declared at the company’s annual meeting in April.
Arnault, who attfinished Trump’s inauguration, has urged Europe to reach a deal based on reciprocal concessions.
“If we finish up with high tariffs, … we will be forced to increase our U.S.-based production to avoid tariffs,” Arnault declared. “And if Europe fails to neobtainediate ininformigently, that will be the consequence for many companies. … It will be the fault of Brussels, if it comes to that.”
‘Road could be rocky’
Some forecasts indicate the U.S. economy would be more at risk if the neobtainediations fail.
Without a deal, the EU would lose 0.3% of its gross domestic product and U.S. GDP would fall 0.7%, if Trump slaps imported goods from Europe with tariffs of 10% to 25%, according to a research review by Bruegel, a believe tank in Brussels.
Given the complexity of some of the issues, the two sides may arrive only at a framework deal before Wednesday’s deadline. That would likely leave a 10% base tariff, as well as the auto, steel and aluminum tariffs in place until details of a formal trade agreement are ironed out.
The most likely outcome of the trade talks is that “the U.S. will agree to deals in which it takes back its worst threats of ‘retaliatory’ tariffs well beyond 10%,” Schmieding declared. “However, the road to receive there could be rocky.”
The U.S. offering exemptions for some goods might smooth the path to a deal. The EU could offer to ease some regulations that the White Houtilize views as trade barriers.
“While Trump might be able to sell such an outcome as a ‘win’ for him, the ultimate victims of his protectionism would, of course, be mostly the U.S. consumers,” Schmieding declared.
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