U.S.-EU Trade Deal Stalls Ahead of Tariff Deadline \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ The EU is bracing for a 15% U.S. tariff on exports starting Friday, despite an unfinished trade agreement. Both sides reached a political deal but have yet to finalize a joint statement outlining terms. Key sectors like aircraft are exempt, while others like wine and spirits remain impacted for now.
Quick Looks
- U.S. set to impose 15% tariffs on most EU exports beginning Friday.
- Tariffs apply to two-thirds of EU goods, valued at €380 billion ($434 billion).
- Political deal reached Sunday by Trump and von der Leyen; legal details pending.
- Joint agreement terms still being finalized, not legally binding.
- Strategic exemptions include aircraft, certain chemicals, and some pharmaceuticals.
- Wine and spirits will be hit with tariffs initially; possible exemption later.
- EU: “Ball is in the U.S. court” for implementing exemptions.
- U.S. alcohol industry criticizes lack of resolution, urges return to zero tariffs.
- EU prepared retaliatory tariffs, to be frozen if U.S. deal holds.
- 30% tariff threat averted but tensions persist over final implementation.
Deep Look
President Donald Trump is moving forward with his administration’s plan to impose a 15% tariff on the majority of European Union exports, despite the absence of a finalized trade agreement. The European Commission said Thursday it is operating under the assumption that the tariffs will take effect Friday, as political negotiations continue without a binding framework in place.
The move follows a political understanding reached last Sunday between President Trump and European Commission President Ursula von der Leyen, which established the tariff ceiling and laid out sector-based exemptions. However, the final written document detailing the implementation—crucial for industry and customs enforcement—has yet to be completed.
The new tariffs are expected to apply to approximately two-thirds of EU exports to the United States, totaling around €380 billion (about $434 billion). European Commission spokesperson Olof Gill emphasized that while the written terms are still being finalized, the EU fully expects the U.S. to implement both the tariff ceiling and the agreed carve-outs.
“It is the clear understanding of the European Union that the U.S. will implement the agreed across-the-board tariff ceiling of 15%,” Gill said. “It is also our clear understanding that the U.S. will implement the exemptions. The U.S. has made these commitments. Now it’s up to them to implement. The ball is in their court.”
The European Commission negotiates trade deals for all 27 EU member nations. While the political deal included strategic exemptions to reduce economic damage, several major European exports—including wine and spirits—are still subject to the 15% levy starting Friday unless further revisions are made.
Exemptions Agreed—But Not Finalized
Among the agreed-upon exemptions are aircraft and aircraft parts, certain chemical products, select generic medications, and key natural resources deemed critical to both economies. These exclusions were seen as essential for preventing disruption to joint industrial and pharmaceutical supply chains.
However, industries that received no such protection—including Europe’s wine and spirits sector—are bracing for immediate impact. The EU’s wine and liquor exports to the U.S. are substantial, and the lack of a last-minute exemption has drawn criticism from business leaders on both sides of the Atlantic.
“It is extremely disappointing that no agreement was reached,” said Chris Swonger, President and CEO of the U.S. Distilled Spirits Council. “The U.S. is the EU’s largest market for spirits. It is critical that President Trump restore zero-for-zero tariffs to protect 1.7 million jobs in America’s spirits industry.”
Averting a Trade Breakdown
Just prior to the agreement, President Trump had threatened to impose tariffs as high as 30% on EU goods—a move that von der Leyen warned would have effectively ended trade between the two economic powers. To counter that threat, the European Commission prepared a broad package of retaliatory measures worth tens of billions of euros.
Those counter-tariffs are scheduled to take effect on August 7, but the EU says it is prepared to freeze them if the U.S. fulfills the terms of the deal.
“If everything goes as expected, we will freeze the retaliatory tariffs,” Gill said. “If we have reached a deal, we don’t need them.”
Still, the absence of a signed, legally enforceable document leaves both the EU and the U.S. in a state of mutual uncertainty. The EU’s trust in the Trump administration’s verbal commitments may be tested in the coming days.
U.S.-EU Trade Relationship at Crossroads
The outcome of this agreement could have lasting implications for the U.S.-EU economic relationship, which has already endured turbulence during Trump’s presidency. The President has repeatedly criticized Europe’s trade practices, calling them unfair to American producers. At the same time, Trump’s push to reassert U.S. economic power has led to increased tariffs and trade renegotiations globally.
For now, the EU is hoping that the Trump administration will honor its commitments in full—including exemptions—and avoid igniting a broader trade conflict.
If those commitments fall through, the Commission is fully prepared to strike back with its own tariff measures on U.S. goods. With hundreds of billions in bilateral trade on the line, how the next 48 hours unfold may shape the trajectory of U.S.-EU trade for years to come.
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