EU Races to Finalize U.S. Trade Deal to Avoid More Tariffs

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European Union officials will meet May 19 in an effort to finalize legislation for the bloc’s trade deal with the U.S. Failure to reach an agreement means the EU risks missing President Donald Trump’s July 4 deadline to have the accord in place.

Trump previously threatened to hike tariffs on European auto imports to 25% from 15% because the EU hadn’t moved quickly enough to implement the deal, which was signed nearly a year ago. 

The disagreement threatens to send transatlantic relations to a new low and could trigger a fresh round of tariff escalation between the allies. The European Commission, which handles trade matters for the EU, has said it maintains options to protect the bloc’s interests if Trump were to follow through on his threat to boost levies. 

Trump set the July deadline after speaking with Commission President Ursula von der Leyen. “I agreed to give her until our Country’s 250th Birthday or, unfortunately, their Tariffs would immediately jump to much higher levels,” the U.S. president posted on social media earlier this month. 

The European Parliament has repeatedly blocked ratifying the agreement after the U.S. Supreme Court struck down Trump’s use of an emergency-powers law to impose global tariffs and after the American president threatened to annex Greenland, a semi-autonomous territory of EU member Denmark.

Under the trade deal — which was signed in July — the EU agreed to erase levies on U.S. industrial goods in exchange for a 15% tariff ceiling on most EU products. Officials in the EU say the U.S. hasn’t complied with all the requirements in the accord, pointing to the fact that Washington widened a 50% tariff on European steel and aluminum in August to include hundreds of new products.

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The U.S. has implemented certain provisions of the deal, capping tariffs on many EU exports at the agreed 15% level.  

Parliament finally approved the deal but added multiple amendments to the legislation. Those include a stipulation that the agreement won’t be implemented until the U.S. honors its commitments and a March 2028 expiration date, unless both sides agreed to an extension.

A landing zone could be a later date and provisions that would see the EU retaliate if circumstances change.

A final version of the bill must be agreed by parliament, the commission and the European Council, which represents the EU’s 28 member states. Once the three institutions agree on the language, it will need to be voted on.  

Trump has repeatedly used the threat of tariffs to pressure countries to offer concessions. Some of those threats have been followed by swift retreats, due to challenges implementing the levies, economic concerns about them or U.S. trading partners’ efforts to address Trump’s objections.

“This latest move demonstrates just how unreliable the U.S. side is,” European Parliament’s Bernd Lange said in comments to Bloomberg News earlier this month. “This is no way to treat close partners.”