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EU negotiators are closing in on a trade deal with Donald Trump that would cement higher tariffs than those granted to the UK, a Brexit dividend that has rattled some European capitals.
Brussels is ready to sign a temporary “framework” agreement that sets the US president’s “reciprocal” tariffs at 10 per cent while talks continue, matching the baseline duty imposed on the UK.
But the EU is not expecting to achieve the same access to the US market as British steel, cars and other products subject to sectoral duties, according to six diplomats briefed on the issue. Trump, who championed the UK’s 2016 decision to leave the bloc, is also demanding 17 per cent tariffs on EU agrifood products.
“The UK agreement was better than this,” said one diplomat. “It’s a surprise given how long we have negotiated.”
When London struck the first deal in May, EU diplomats and officials made clear they believed London jumped at an agreement and locked-in disadvantageous terms.
Brussels was more confident its bigger economic clout — as the world’s largest trading bloc — would over time give it leverage over the White House. But it has hesitated to retaliate in kind against US measures.
Anna Cavazzini, chair of the European parliament’s internal market committee, said: “Not directly responding to illegal Trump tariffs in April was a mistake, leaving little room for the [European] commission to cut down existing rates.”
Sir Keir Starmer, UK prime minister, by contrast gambled on moving early on a deal and paired his business adviser Varun Chandra — a former managing partner of London consultancy Hakluyt — with US commerce secretary Howard Lutnick to drive negotiations.
One British official said: “We approached it like a business deal not a trade negotiation. We’ve played it straight, understood what the US is trying to achieve, matched our people to theirs, and been flexible.”
EU negotiators have been scolded over their approach throughout the talks by both business and some European capitals. LVMH chief executive Bernard Arnault in May said the bloc got off to a “bad start”, especially compared to the British who “negotiated very well”. Friedrich Merz, Germany’s chancellor, last week said the commission’s approach was “far too complicated” and called for a “rapid” deal.
Talks between the EU and US are continuing, but both sides expect an agreement this week. Trump said a “letter” might be agreed within days.
Without a deal, tariffs on the EU would rise to either 20 per cent or 50 per cent on August 1, after Trump postponed a July 9 deadline. One diplomat argued that reducing it to 10 was a success.
The US was “probably two days off” from sending the EU a letter outlining its planned tariffs, Trump said on Tuesday
The UK, which runs a trade deficit with the US, faced the 10 per cent baseline tariff and failed to reduce it. However, London secured better terms on the “sectoral” tariffs — though the EU diplomat questioned whether the US would implement them.
The UK was granted an annual quota of 100,000 cars at a 10 per cent tariff — a discount from the 25 per cent levy facing other exporters to the US — and a zero-tariff deal on steel and aluminium, although this has still to be implemented.
British negotiators also won the promise of “significantly preferential” treatment on so-called “section 232” tariffs on pharmaceuticals, an investigation the White House is currently pursuing. The UK also obtained assurances regarding future 232 investigations into other sectors, which include copper, timber and jet engines.
In return, the UK pledged to meet US “requirements” on China’s role in its supply chains, as well as a tariff-free quota of 13,000 tonnes of beef and 1.4bn litres of bioethanol.
Trump has long been hostile to the European project, calling the EU “nasty” and claiming it was set up to “screw the United States”.
The EU has no guarantees tariffs on steel would be cut from their 50 per cent level, the diplomats said. The US has also declined to exempt the bloc from future sectoral tariffs in areas such as pharmaceuticals and semiconductors.
The two sides are working on plans to reduce the 25 per cent tariff on vehicles and are considering an agreement to abolish levies on spirits, aircraft and parts. The EU is also prepared to reduce its €198bn trade surplus in goods by committing to buy more US weapons and liquefied natural gas.
David Henig of the European Centre for International Political Economy think-tank said the EU had a harder task despite its bigger size.
“Considering the things Trump has said about the EU, a 10 per cent tariff would probably be better than some were expecting, but this is still a blow to a bloc that started the process thinking they could remove all Trump’s tariffs, and that the UK had made a mistake in settling.”
The bloc has paused its retaliation during the talks with Washington. But counter-tariffs on €21bn of annual US exports should apply from July 14. The commission is assembling a package of €95bn more, including on aircraft, alcohol and food, which would need member states’ approval.
The commission did not respond to a request for comment.
