Key Points
- European officials are increasingly accepting that a 10% tariff on most EU goods is the starting point for any trade deal with the U.S.
- The Trump administration, led by Commerce Secretary Howard Lutnick, has refused to negotiate below this 10% baseline.
- The EU is scrambling to finalize a deal before July 9th, when U.S. tariffs on many goods are set to increase to 50%.
- It’s harder for the EU to argue for lower rates now that the U.S. is collecting significant revenue from its new tariffs.
European officials are growing increasingly resigned to a tough reality: any new trade deal with the United States will likely include a 10% tariff on most European goods. According to sources familiar with the sensitive negotiations, the Trump administration has made it clear that a 10% rate is the baseline, and they are not willing to go any lower.
President Donald Trump is determined to reduce the U.S. trade deficit with the European Union. U.S. Commerce Secretary Howard Lutnick has publicly ruled out setting a rate below 10% for these “reciprocal” tariffs. This is a big problem for the EU, which has a massive trade surplus with the U.S. and has more to lose from a trade war.
While EU negotiators are still officially pushing for a lower rate, sources say it has become much harder to argue now that the U.S. is starting to collect significant revenue from its new global tariffs. The U.S. Treasury reported that customs duties more than doubled in April compared to last year.
The clock is ticking. The EU is attempting to secure a deal before July 9th, when U.S. tariffs on many European goods are set to increase from 10% to as high as 50%. Trump has already imposed steep tariffs on steel, aluminum, and cars in Europe, causing significant headaches for European automakers, including Mercedes and Volvo.
The situation is so tense that some European industries, such as the wine and spirits sector, would rather accept a 10% tariff now than face a prolonged, drawn-out trade war with even greater uncertainty.
