Trade negotiations between Europe and the US are at an impasse, and the US side does not plan to cancel most tariffs

The Zhitong Finance App learned that this week, talks between the EU and the US on trade differences had little effect. US President Trump's administration officials have made it clear that most of the tariffs imposed on EU goods will not be lifted, making the atmosphere of negotiations tense.

According to people familiar with the matter, EU Trade Commissioner Maros Sefcovic held talks with US Commerce Secretary Lutnick and Trade Representative Jamieson Greer for about two hours in Washington this Monday, but he is still confused about the real position of the US side. He failed to clearly understand America's ultimate goal in the negotiations.

Sources said that the US has temporarily lowered the original 20% “reciprocal” tariff to 10% for a period of 90 days, but tariffs on various industries, including automobiles and metals, will not be completely abolished.

Earlier this month, Trump announced major adjustments to the global trading system, with the goal of reviving US manufacturing and increasing fiscal revenue to support extended tax relief policies. This series of tariff measures affects about 380 billion euros (about 431 billion US dollars) of EU goods, and it is planned to further expand to semiconductors and pharmaceutical products.

Affected by this news, there was a reaction in the European bond market. The yield on German 10-year treasury bonds fell slightly from 2.55% to 2.53%; the European Stock Exchange 600 index also narrowed its gains after the news was released.

Last week, the EU announced that it would delay countermeasures against US steel and aluminum tariffs for 90 days in exchange for a temporary reduction in US tariffs on most EU exports. Similarly, the EU also plans to impose retaliatory tariffs on US products worth about 21 billion euros after negotiations have failed, and has begun preparing a wider range of countermeasures.

Although the US side insists on maintaining industrial tariffs, it is reported that if US investment, production capacity, and exports increase, some automobile tariffs may be mitigated through industrial cooperation. However, the US side may still raise these tariffs in the future, unless exports improve significantly.

The European Union proposed abolishing tariffs on industrial products, including automobiles, but the proposal has so far been rejected by the US side. According to data from the US Department of Commerce, the total number of cars imported by the US from the EU reached 52.3 billion US dollars last year, while automobile exports to the EU were only 11.3 billion US dollars. Most of these were SUVs assembled by German BMW and Mercedes-Benz in the US.

Trump has criticized the EU many times, saying that its original intention was to “exploit” the US, and viewed the EU's merchandise trade surplus as evidence of “unfair trade.” According to World Trade Organization data, the EU's weighted average tariff in 2023 is 2.7%.

People familiar with the matter revealed that the US hopes that EU chemical companies will increase production of key pharmaceutical ingredients in the US, and that they hope to make concessions on procurement policies, supply chain integration, and drug pricing. US Vice President Vance once said that European drug prices are lower because US taxpayers are “paying for” the European healthcare system.

On the issue of steel, aluminum, and copper tariffs that may be added in the future, the US hopes that the EU will take the initiative to submit proposals and even discuss the possibility of a “common tariff,” but some of the ideas may violate WTO regulations, and have yet to receive unanimous support from within the US side.

According to foreign media reports earlier, the EU is preparing a “list of key points” for negotiations, covering various aspects such as tax reduction, regulation coordination, and standard unification. Furthermore, the EU has also proposed increasing imports of liquefied natural gas from the US as an alternative route to ease trade disputes, but the US side has had little interest in this so far.

However, Trump said this month that energy deals will help reduce the EU's trade surplus with the US. He claims: “Deficits are easy and quick to disappear because they need American energy. They have to buy and they have to commit to buying the right amount of energy.”

The US side also insisted on expanding the scope of discussions to non-tariff barriers, such as digital and artificial intelligence regulation, and food safety standards. The two sides will continue discussions.