Donald Trump, EU’s Ursula von der Leyen to meet on Sunday to clinch trade deal

“We’re cautiously optimistic that there will be a deal reached,” said a Trump administration official, who spoke on condition of anonymity. “But it’s not over till it’s over.”

Ambassadors of EU governments, on a weekend trip to Greenland organised by the Danish presidency of the EU, held a teleconference with EU Commission officials on Sunday to agree on the amount of leeway von der Leyen would have in the talks.

In case there is no deal and the U.S. imposes 30% tariffs from August 1, the EU has prepared counter-tariffs on 93 billion euros ($109 billion) of U.S. goods.

EU diplomats have said a deal would likely include a broad 15% tariff on EU goods imported into the U.S., mirroring the U.S.-Japan trade deal, along with a 50% tariff on European steel and aluminium for which there could be export quotas.

The EU deal would be a huge prize, given that the U.S. and EU are each other’s largest trading partners by far and account for a third of global trade.
EU officials are hopeful that a 15% baseline tariff would also apply to cars, replacing the current 27.5% auto tariff.

Some expect the 27-nation bloc may be able to secure exemptions from the 15% baseline tariff for its aerospace industry and for spirits, though probably not for wine.

The EU could also pledge to buy more liquefied natural gas from the U.S., a long-standing offer, and boost investment in the United States.

Trump told reporters there was “not a lot” of wiggle room on the 50% tariffs that the U.S. has on steel and aluminium imports, adding, “because if I do it for one, I have to do it for all.”

The U.S. president, in Scotland for a few days of golfing and bilateral meetings, told reporters upon his arrival on Friday evening that von der Leyen was a highly respected leader and he was looking forward to meeting with her.

He said there was a 50-50 chance that the two sides could reach a framework trade pact, adding that Brussels wanted to “make a deal very badly”.

The EU now faces U.S. tariffs on more than 70% of its exports, with 50% on steel and aluminium, an extra 25% on cars and car parts on top of the existing 2.5% and a 10% levy on most other EU goods. Trump has said that without a deal, he would hike the rate to 30% on August 1, a level EU officials said would wipe out whole chunks of transatlantic commerce.

Further tariffs on copper and pharmaceuticals are looming. The uncertainty and higher tariffs have already hit profits of EU companies in several sectors.
A 15% tariff on most EU goods would remove uncertainty but would be seen by many in Europe as a poor outcome compared to the initial European ambition of a zero-for-zero tariff deal on all industrial goods.

Seeking to learn from Japan, which secured a 15% baseline tariff with the U.S. in a deal earlier this week, EU negotiators spoke to their Japanese counterparts in preparation for Sunday’s meeting.

For Trump, aiming to reorder the global economy and reduce decades-old U.S. trade deficits, a deal with the EU would be the biggest trade agreement, surpassing the $550 billion deal with Japan.

So far, he has reeled in agreements with Britain, Japan, Indonesia and Vietnam, although his administration has failed to deliver on a promise of “90 deals in 90 days.”