Trump Hints At Slim Odds For US-EU Deal – What’s Next For Global Trade?

Any agreement would likely include a 15 per cent baseline tariff on EU goods entering the US and a 50 per cent levy on European steel and aluminium, according to diplomats familiar with the talks.

The EU currently faces US tariffs on more than 70 per cent of its exports: 50 per cent on steel and aluminium, 25 per cent on cars and car parts, and 10 per cent on most other goods.

Source : Freepik

Global investors are keeping a close eye on high-level trade negotiations between the United States and the European Union, as hopes rise for a breakthrough before next Friday’s deadline for new tariffs.

European Commission President Ursula von der Leyen is scheduled to meet US President Donald Trump in Scotland on Sunday, with EU officials and diplomats suggesting a framework agreement could emerge as early as this weekend, reported Reuters.

Trump, however, played down expectations on Friday, saying there was only a “50-50 chance or perhaps less” of striking a deal.

Investors Seek Clarity as Trade Tensions Weigh on Markets

Market strategists say the uncertainty has been a factor behind recent cautious sentiment. “It’s one of our largest trading relationships… So if that last piece falls into place, then you’ve probably got at the margin more people that have to get back in the markets,” said Sameer Samana, head of global equities and real assets at the Wells Fargo Investment Institute. “It’s been a source of uncertainty that will go away.”

Any agreement would likely include a 15 per cent baseline tariff on EU goods entering the US and a 50 per cent levy on European steel and aluminium, according to diplomats familiar with the talks.

Optimism that trade friction might ease has helped drive US equities to fresh highs. Trump’s April 2 “Liberation Day” announcement of sweeping tariffs initially sent markets tumbling amid recession fears — concerns that have gradually subsided.

Auto and Metals Tariffs at the Centre of Talks

The EU currently faces US tariffs on more than 70 per cent of its exports: 50 per cent on steel and aluminium, 25 per cent on cars and car parts, and 10 per cent on most other goods. Trump has signalled that those tariffs could jump to 30 per cent on 1 August if no agreement is reached.

Investor sentiment received a boost earlier this week after Trump finalised a trade deal with Japan, which cut tariffs on Japanese autos to 15 per cent from the previous 27.5 per cent. Analysts at Capital Economics noted, “The deal with Japan and the likely one soon with the EU are especially important given both are major US trading partners, together accounting for about a quarter of all goods imports.”

Meanwhile, attention is also turning to the US–China track. Officials from both countries are expected to meet in Stockholm next week to discuss extending the 12 August deadline for their own negotiations, adding another layer of intrigue for global markets in the days ahead.