The European Union is reportedly on the precipice of a trade deal with the United States wherein it will pay 15-percent duties on exports to the American market.
Slated to mirror the agreement struck with Japan on Tuesday, the European Commission has presented the deal to members of the trade bloc, according to a report from the Financial Times. Should the partners agree to the terms, the EU will face half the tariffs it was threatened with by the Trump administration earlier this month, and certain products like aircrafts, spirits and medical products will be exempt from duties.
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Should the U.S. and the EU find themselves unable to broker a truce, however, Europe has said it will impose 30-percent tariffs on American products like spirits and Boeing airplanes imported into the region—duties said to be worth about 100 billion euros ($117.6 billion). These countermeasures reflect the 30-percent duty rate Trump said he planned to implement against the EU two weeks ago.
News of the progression in negotiations comes as European officials have been pushing to strike a deal with Trump before the Aug. 1 deadline. On Wednesday, Commerce Secretary Howard Lutnick said in an interview on Bloomberg Television that the two sides were “making good progress” despite the difficulty of wrangling 27 member nations into consensus.
He also explained how a large country or trade bloc like the EU might be able to negotiate a lower tariff rate through “innovative financing mechanisms” like the provision laid out in the trade agreement with Japan, which agreed to funnel $550 billion into the U.S. market.
According to Lutnick, that investment will go toward projects chosen and executed by American enterprises, like creating a supply chain infrastructure for the development and manufacturing of pharmaceuticals or semiconductors, for example.
Japan’s government will back those efforts and the profits will be split between the U.S. market (90 percent) and Japan (10 percent). The commerce secretary said Japan’s willingness to provide equity, loans and loan guarantees for American projects is what ultimately convinced the president to lower its tariff rate to 15 percent.
Lutnick said such a model “could be” a model for Brussels, though “Europe is not going to give us $1 trillion to invest.” He also said that larger countries that are making their way to the table now are unlikely to negotiate tariff rates lower than 15 percent, though smaller nations might have a better shot at more favorable trade terms.
Trump took to Truth Social Wednesday to broadcast a message to countries still in the throes of negotiations. “I will always give up Tariff points if I can get major countries to OPEN THEIR MARKETS TO THE USA,” he wrote.
