China & UK trade talks with Trump put EU under pressure

China & UK trade talks with Trump put EU under pressure

After London comes Beijing: US President Donald Trump announced a breakthrough in talks with China to put an end to their rapidly escalating tariff war on Wednesday night, though the details of the agreement remain unclear, and key elements are still awaiting formal approval.

“Our deal with China is done, subject to final approval with President Xi [Jinping] and me,” Trump wrote on his social media platform, Truth Social. “Full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!)”

One day later, the scope of the deal remains uncertain. Neither Trump nor US officials had clarified which tariffs might be lifted or what concessions were included, according to the Associated Press news agency. Negotiations appear to be ongoing.

‘Liberation Day’ wounds healing

Two months ago, Trump announced a blanket baseline 10% tariffs on virtually all goods imported into the US, an event he dubbed “Liberation Day.” Higher country-specific rates followed, with Chinese imports hit particularly hard.

Beijing immediately retaliated, with sharp increases of its own, sending bilateral tariffs soaring — peaking at 145% in some cases — on a trade relationship worth $583 billion (approximately €503.5 billion) in 2024. 

While recent negotiations have helped bring mutual tariffs down, tensions remain. As of mid-May, US tariffs on Chinese goods averaged 51%, while Chinese tariffs on US goods stood at 33%, according to the Peterson Institute for International Economics, a US think tank.

The UK and the US struck a much-vaunted deal one month ago. However, tariffs on key goods remain in place, pending further implementation.

Europe treads cautiously

Compared to China, the EU has so far opted for a rather restrained approach, with high-level officials engaged in intensive talks.

As of April, most EU exports to the US have faced 10% tariffs. Additional 25% duties on steel and aluminum, imposed in March, remain in effect. The bloc has so far avoided the higher rates slapped on China. 

The EU was poised to hit back with significant countermeasures on everything from whiskey to motorcycles prepared a second package, though both have been paused as EU-US negotiations continue.

Brussels is pushing for a “zero-for-zero” trade agreement, aiming to eliminate tariffs on industrial goods. So far, talks have stalled. One of Trump’s key complaints is the persistent trade imbalance. 

In 2024, the US imported significantly more goods from the EU than it exported, with a trade deficit of $216 billion, according to official US figures. However, the EU frequently argues that the US sells far more services to the bloc than the other way round.

One option the European Commission, which as the EU executive branch represents the 27 member states in negotiations, has proposed is pushing EU companies and countries to buy more natural gas from the US, a shift that is already well underway since it turned away from Russia following its full-scale invasion of Ukraine in 2022.

EU’s nuclear option

If all else fails for the EU and Trump resorts to 50% tariffs or even higher rates, there has been some discussion of another more radical move from the EU.

“Should Europe retaliate if Trump’s tariffs hit on 9 July, and how? If yes, then there seems to be general agreement that, beyond tariffs on goods, US digital services are the most likely and vulnerable target,” Tobias Gehrke of the European Council on Foreign Relations posted late last month on social media platform Bluesky.

Gehrke pointed to the EU’s Anti-Coercion Instrument, a legal framework which empowers the EU to target services and could limit US companies’ access to public procurement contracts in Europe. It came into effect in 2023, but has never been used,

Time is of the essence

With talks ongoing, US Secretary of Commerce Howard Lutnick has indicated that the bloc is at the back of the line. “I’m optimistic that we can get there with Europe,” Lutnick told US broadcaster CNBC on Wednesday. “But Europe will probably be at the very, very end.”

On Thursday, US outlet Bloomberg reported that EU officials expect talks to extend beyond the current July 9 deadline, citing unnamed sources close to the negotiations.

Italy’s pecorino cheesemakers feel effects of Trump tariffs

For negotiators, the pressure to wrap up a deal is enormous.

“We’ll get this deal done in the best way possible,” an EU official told DW on the condition of anonymity. “But it’s very clear that not only in the EU institutions, but also around the member states, people just don’t want to go through this anymore.”

“In the volatile world we’re in, everyone wants to have reliable trading partners, and the US just isn’t that right now,” the source added.

In the coming days, the G7 and NATO summits in Canada and the Netherlands respectively, might have presented an opportunity for Trump and European Commission President Ursula von der Leyen to meet.

However, the European Commission said on Thursday that no bilateral meetings were currently planned.

“That could still change,” Commission spokesperson Miriam Garcia Ferrer told reporters at a briefing in Brussels.

---

Sources

EU’s zero-for-zero tariff bid stalls amid US pushback – politico.eu

EU Likely to Be at ‘Very End’ of US Trade Deals, Lutnick Says – Bloomberg

Between ‘rollover UK’ and ‘retaliatory China’: will EU hardball secure trade deal with US? – The Guardian