EU locked in Trump trade talks as ‘Liberation Day’ tariff deadline looms

The European Union and the United States have just 48 hours to resolve a trade dispute or face Donald Trump unleashing billions of dollars worth of transatlantic tariffs.

A 90-day pause on the imposition of the US president’s so-called “Liberation Day” import taxes expires on Wednesday, and leaders across Europe are bracing for the threat of 50 per cent tariffs on goods sold in the US.

A split has emerged in the bloc, with some urging European trade commissioner Maros Sefcovic to pursue a UK-style deal to resolve the trade dispute, sparing the EU from the worst of Mr Trump’s wrath.

Other EU leaders have cautioned against the thin UK-US deal agreed by Sir Keir Starmer, and believe Brussels should use its clout to secure a more comprehensive agreement.

Mr Trump imposed a 20 per cent import tax on all EU-made products in early April as part of a set of tariffs targeting countries with which the US has a trade imbalance. Hours after the nation-specific duties took effect, he put them on hold until 9 July at a standard rate of 10 per cent to quiet financial markets and allow time for negotiations.

But as talks dragged on, Mr Trump has threatened to hike the tariff rate to 50 per cent if a deal is not reached. The higher rate would hit everything from French cheese to Italian leather goods, making them more expensive for American consumers.

Talks will now go down to the wire this week, with Mr Sefcovic and US treasury secretary Scott Bessent’s teams seeking to hash out a deal to avoid escalating the trade war.

“Among member states, the big question will be whether we should reach a deal at all costs to avoid a trade war, or show muscle if the deal is not good enough,” one EU diplomat told The Guardian.

German chancellor Olaf Scholz has called for a similar deal to the UK’s sector-specific agreement, while French president Emmanuel Macron is keen instead for a better, more comprehensive deal if a rushed agreement is uneven.

Mr Trump has previously threatened to impose 17 per cent tariffs on European food and farm products as part of the US’s aggressive negotiating tactics, with the president once describing the EU as “nastier” than China on trade.

Progress towards a deal was made last week, an EU trade spokesperson said on Friday, but talks continued throughout the weekend.

Without a deal, the EU has said it was prepared to retaliate with tariffs on hundreds of American products, ranging from beef and auto parts to beer and Boeing aeroplanes.

Given the complexity of the talks, it may only be possible for the sides to arrive at a slimmed-down deal by Wednesday, leaving a 10 per cent base level tariff in place, as well as specific tariffs on cars, steel and aluminium.

Before Mr Trump was re-elected, the average tariff on goods from the EU sold in the US was just 2 per cent.