EU Patiently Working Toward Deal, but Preparing Retaliation in Case It Fails, Official Says
The chief negotiator for the EU told reporters in Brussels July 14 that his team had thought "we are very close to an agreement," though there were still "quite large gaps" on what the U.S. was offering and what the EU could accept on goods subject to national security tariffs, such as cars and steel, and, perhaps in the future, pharmaceuticals.
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Maros Sefcovic said, "We were working on ... finding the mutually acceptable solutions on the so-called 232 sectors." He also said: "My sense was we were approaching a good outcome on both sides."
But Sefcovic said that the EU member countries are still at the table, and are again delaying retaliatory tariffs that had been scheduled to begin July 14. However, in case the two sides cannot reach an agreement by Aug. 1, the EU is preparing a second, larger set of retaliatory tariffs on 72 billion euros' worth of U.S. exports, and is open to all options -- code for retaliating against U.S. services, where the U.S. has a surplus with Europe.
Trump said in a social media post that he would "perhaps" consider lowering the tariffs if the EU offers “complete, open Market Access to the United States, with no Tariff being charged to us."
The head of Trump's Council of Economic Advisers, Kevin Hassett, told ABC that the reason Trump sent out letters now is because Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer shared the outlines of deals that were coming together, and Trump felt they were not good enough (see 2507140030).
Sefcovic told reporters in Brussels that he planned to talk again with Lutnick and Greer later on July 14. "The EU never walks away without a genuine effort, especially considering the hard work invested, how close we find ourselves to making a deal, and the clear benefits of a negotiated solution," he said in opening remarks, but also said "it takes two hands to clap."
At a press conference, he was asked how he could believe there's still a path to avoid 30% tariffs, given that this letter came when the EU had felt hopeful they were close to a deal.
Sefcovic said negotiators from the EU and the U.S. have spent three months drafting the agreement in principle, "going through 1,700 tariff lines," and discussing details across many areas, from agriculture to spare parts for cars. He doesn't think they would have done that if this could be ended by one letter.
Still, he acknowledged, the threat "puts us into a totally different dynamic."
Sefcovic said that if 30% tariffs were imposed, or higher tariffs, after the EU retaliates, it would mostly shut down trade between the EU and the U.S., and that would be damaging for U.S. manufacturers, not just EU economies. He said it would be "almost impossible" to export with such high rates.
The majority of goods imported from the EU are intra-company imports, data shows.
"Show me one industrial leader that's happy about these tariff wars," he said.
Foreign ministers from around the EU came to Brussels on July 14 and discussed the developments with Sefcovic. Dutch Foreign Minister Lokke Rasmussen told reporters, "We do not want a trade war with the U.S."
Sefcovic agreed, and said, "We are showing enormous patience, enormous creativity to find the solutions."
The 30% rate would be on goods outside the Section 232 sectors, but it's not clear whether that would be 30% on top of most favored nation rates, or replacing line-by-line duties, Sidley trade attorney Ted Murphy wrote in a note to clients.