【Translated by an AI Language Model Developed by a Chinese Company】
The US and Europe continue to engage in a “limited pull” over tariff issues. According to multiple sources cited by The Financial Times on July 19th, President Donald Trump has raised higher demands during negotiations, demanding that any agreement include a minimum tariff rate of 15% to 20% on EU goods, testing the EU’s breaking point. In recent weeks, the EU’s goal in negotiations with the US was to secure a majority of goods at a base tariff rate of 10%.
Sources also mentioned that Trump showed no interest in the EU’s latest proposal for mutual reduction of car tariffs, preferring instead to impose a 25% tariff on European cars. Analysts believe that the likelihood of reaching a trade agreement between the US and Europe before August 1st is diminishing.
Additionally, a European official stated that the EU is prepared to “take multiple measures” in response to Trump’s tariffs, including sincere negotiations, preparation for countermeasures, coordination with other countries, and enhancing competitiveness in Europe.
In early April, Trump announced he would impose a “countervailing tariff” of 20% on EU goods and notified the EU on the 12th that the tariff would be increased to 30%, effective from August 1st. The EU is also facing high steel and aluminum tariffs of up to 50% and a 25% car tariff from the US.
On July 18th, Marros Schavrovic, the EU’s chief negotiator, briefed EU officials on recent negotiations in Washington. Two individuals familiar with the meeting content described him as making a pessimistic assessment.
On July 18th, in Barcelona, Spain, one of Europe’s largest ports, containers and cargo ships were docked at the port. (Visual China)
An American official told The Financial Times that even if a deal is reached between the US and Europe, the “countervailing tariffs” within those agreements will exceed 10%.
As EU member states become increasingly pessimistic about reaching an agreement, German Chancellor Merkel warned on July 18th that the US’s reaction to the EU’s proposal to reduce industry tariffs is very cold.
He said, “Whether we can still establish industry rules and whether we can treat some industries differently from others remains an open question. The European Union supports this approach, while the US is more cautious.”
An EU high-level diplomat stated that if Trump insists on a 15% to 20% permanent “reciprocal tariff”, it would not be much better than the 20% tariff announced at the beginning of April, and could potentially prompt the EU to take retaliatory measures.
“We do not want a trade war to break out, but we are unsure whether the US will leave us with room for maneuver,” said the EU official.
Another EU diplomat added, “It’s now clear that we have shifted towards a climate of support for retaliation,” “We will not accept a 15% tariff.”
The EU has drafted several countervailing tariff schemes but has repeatedly delayed their implementation. Early this year, the EU had already approved its first round of countervailing tariffs against the US, involving $21 billion worth of goods exported to the US, but these measures were postponed until August 6th to allow for negotiation time.
On the 14th, the European Commission proposed a second round of countervailing lists, covering aircraft, cars, machinery, and agricultural products, valued at €72 billion, which is still awaiting approval.
Despite Trump’s threat to raise tariffs again, there is still disagreement among European countries on whether to further increase their bargaining chips in negotiations with the US.
According to an EU national official, current discussions within the EU are “preparatory” in nature, aimed at preventing negotiations from breaking down before the deadline. “The basic principle is, if negotiations don’t succeed, don’t start asking what to do when there’s no other option left.”
Faced with Trump’s tariff threats, the EU plans to resolve the situation through four strategies.
Michal Baranowski, Deputy State Secretary for Economic Development and Technology of Poland, told CNBC that the EU implements a four-step strategy in its efforts to reach an agreement.
“The first step is to engage in sincere negotiations with American officials.”
“The second step, if an agreement cannot be reached, we will prepare countermeasures. We have countermeasures against steel and aluminum tariffs and the so-called ‘countervailing tariffs’ involving 72 billion euros.”
“The third step is to consult with other countries similarly affected by US tariffs. Although it’s not formal coordination, we want to understand the positions of other countries because they are also on the same sideline during negotiations with the United States.”
“The fourth step is to comprehensively enhance Europe’s competitiveness.”
EU data shows that the US-Europe trade and investment relationship is the largest bilateral trade and investment relationship globally, accounting for nearly 30% of global goods and services trade and contributing to 43% of global GDP.
In just one year last year alone, the US-Europe trade volume reached 1.68 trillion euros, equivalent to about 4.6 billion euros in trade exchanges per day.
Baranovskiy stated that the EU is “the most important economic partnership” for the United States, and the US-European trade relationship is crucial for both sides, with “equal gains and losses.”
CNBC reported that a key element of the EU’s negotiation strategy is proposing tariff cuts on cars.
The Financial Times reported on the 17th that the EU is prepared to reduce its tariffs on US car exports by 10%, conditional on the Trump administration lowering tariffs on European cars below 20%.
Earlier this year, Trump had already imposed a 25% tariff on foreign-made vehicles, which dealt a heavy blow to European automakers, such as Volvo’s significant decline in operating profits in the second quarter of 2025.
Unlike the long-standing deficit in commodity trade, the United States has maintained a long-term trade surplus in service trade with Europe. In the view of “Politico” News Europe, once friction escalates, this could potentially become a “fatal weakness” for the US.
In fact, within the EU, whether to target the service sector has long been a topic of discussion. This option was once shelved due to hopes for reaching a preliminary agreement.
Countries such as France have been urging Brussels to adopt a more aggressive stance in negotiations with the United States. French President Emmanuel Macron even called for the use of the EU’s most powerful “counter-coercion tool” (ACI) to combat US trade in services. The ACI would allow the European Commission to restrict American companies from participating in EU public procurement or further limit how large tech companies operate within the EU.