The US and EU are heading toward a trade clash, as Donald Trump threatens 50% tariffs unless a deal is struck by July 9.
Hamburg, Germany. (WE) — The United States and the European Union are locked in a high-stakes trade dispute. Tensions have flared after President Donald Trump threatened a 50% tariff on EU goods. The original deadline for a deal, June 1, has now been postponed to July 9. But that delay has not eased concerns in Brussels or Washington.
Trump initially pushed for sweeping tariffs, saying talks with the EU were “going nowhere.” Just two days later, however, he backed off. He accepted a request from European Commission President Ursula von der Leyen to delay the duties. According to von der Leyen, more time was needed to reach “a good deal.”
The sudden U-turn reflects the broader uncertainty surrounding US-EU trade negotiations. Trump has long argued that the EU exploits the US through unfair practices. He insists on maintaining a 10% baseline import tax unless European leaders meet American demands.
After their phone call, Trump said von der Leyen “wants to get down to serious negotiation.” Von der Leyen echoed the sentiment, stating on social media that the EU was “ready to move quickly.” Yet it remains unclear how far each side is willing to bend.
French President Emmanuel Macron tried to strike a hopeful tone during a trip to Vietnam. He said discussions were “advancing” and that both sides should aim for the “lowest tariffs possible.” But the broader context is far from simple.
Trump’s warning came during a broader stop-start trade war that began in April. The strategy has unnerved global markets and heightened fears of a slowdown. Still, it has also yielded limited results. Washington has secured deals with the United Kingdom, Vietnam, and Japan, while talks continue with India and others.
Europe, however, presents a more complex challenge.
Trump’s frustration stems from what he sees as slow progress. He posted on Truth Social that US discussions with the EU were “going nowhere.” He proposed a 50% tariff on EU imports beginning June 1, unless the products were made in the US. That post was published on May 30. By June 2, Trump changed course, saying von der Leyen had convinced him to delay.
Still, he remains opposed to a key EU idea: cutting tariffs to zero. Brussels has proposed mutual tariff elimination. Trump wants to preserve the 10% rate the US now applies across many sectors. In early May, the UK signed a trade pact that keeps the 10% tariff intact.
Maroš Šefčovič, the EU trade chief, said Brussels is committed to a fair deal. But he also warned that US-EU trade must be based on “mutual respect, not threats.” That comment followed Trump’s threat of a blanket tariff increase.
Šefčovič added that Europe exported €532 billion ($603 billion) in goods to the US in 2024. The biggest categories were pharmaceuticals, autos, chemicals, and aircraft. But the US argues that the trade balance remains skewed. It imported €333 billion ($377.8 billion) in goods from the EU, creating a surplus of nearly €200 billion ($227 billion).
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So, what has the EU offered to defuse tensions?
According to Bloomberg, the European Commission proposed scrapping tariffs on industrial goods and opening markets for select US agricultural products. Brussels also wants to collaborate on AI infrastructure, port development, and energy — including oil, gas, and nuclear power.
In exchange, the EU seeks a gradual reduction of the US’s 10% tariff. However, US trade officials rejected the proposal. While the EU has stressed a desire for compromise, it has also prepared for retaliation.
Member states approved a 50% tariff on €21 billion ($23.8 billion) worth of American goods. That includes wheat, maize, and clothing. The EU will impose these tariffs on July 14 if the two sides fail to reach a deal. Additional levies on US products worth €95 billion ($107.8 billion) are also on standby. Items targeted include Boeing aircraft, automobiles, and Kentucky bourbon.
From Trump’s perspective, the EU has long “ripped off” the United States. He wants the EU to reduce its large goods surplus and adopt US-friendly policies. Washington particularly criticizes Europe’s value-added tax and its rules on tech and food imports, arguing that they create hidden trade barriers.
Šefčovič has signaled willingness to buy more US gas, military hardware, and farm products. He also suggested Brussels could support joint tariffs against China, which Trump has accused of unfair trade subsidies.
Šefčovič will meet his US counterpart Jamieson Greer in Paris next month. The talks will focus on how to cool tensions and find common ground. But analysts warn that political calculations could complicate any agreement.
Tariffs, if enacted, would hurt both economies. In 2023, the US had a €109 billion ($124 billion) surplus in services, led by tech exports and intellectual property. But the goods imbalance remains a sore point for the White House.
The International Monetary Fund warned that a full-blown trade war could shrink GDP by 0.3 to 0.6 percent on both sides. That would ripple through markets, supply chains, and employment sectors.
With the July 9 deadline approaching, the stakes are high. Trump has praised deals with other nations, calling them proof of his tough-but-effective tactics. Still, critics say the confrontational style risks damaging long-standing alliances.
For now, both sides are talking. But if there’s no agreement by July, the US could slap steep tariffs on European goods. The EU is ready to retaliate. That would escalate a conflict neither economy can afford.
The next few weeks will test whether Washington and Brussels can find compromise — or whether another chapter of economic warfare is about to begin.
