The EU is seeking an exemption from the 10% rate for certain key products including aircraft, aircraft parts as well as wine and spirits. — Bloomberg
BRUSSELS: The European Union (EU) is seeking to conclude a preliminary trade deal with the United States this week that would allow it to lock in a 10% tariff rate beyond an Aug 1 deadline as they negotiate a permanent agreement.
The EU is seeking an exemption from the 10% rate for certain key products including aircraft, aircraft parts as well as wine and spirits, according to people familiar with the matter.
Some form of relief is expected as part of the agreement in principle.
The European Commission, which handles trade matters for the EU, briefed member states on Monday on the status of the negotiations.
A spokesperson from the commission declined to comment on the ongoing talks.
The United States announced on Monday that universal tariffs that were due to kick in July 9 would be delayed until at least the beginning of August.
For the EU, tariffs on nearly all its exports to the United States will jump to 50% on that date if it doesn’t strike a deal beforehand.
Trump has imposed tariffs on almost all US trading partners, saying he wants to bring back domestic manufacturing, needs to pay for a tax-cut extension and stop other countries from taking advantage of the United States.
The EU is also pushing the United States for quotas and exemptions to effectively lower Washington’s 25% tariff on automobiles and car parts as well as its 50% tariff on steel and aluminum, according to the people.
But a breakthrough on those levies is not immediately forthcoming. However, the two sides are discussing a so-called offsetting mechanism that would allow companies that make automobiles in the United States to export a certain number tariff free, said the people.
Some officials are concerned that such an arrangement could see investments and production shift across the Atlantic.
Any initial deal would likely be short and not legally binding. The two sides are aiming for common ground on non-tariff barriers, digital trade and economic security.
In addition to so-called reciprocal tariffs and sectoral levies on cars and metals, the United States is working to introduce duties on other sectors, including pharmaceuticals and semiconductors.
Member states are divided on how imbalanced a deal the bloc should accept, with some pushing for a quick agreement while others want the EU to impose countermeasures and negotiate from a position of strength. — Bloomberg
