Tariffs, the EU aims for a 10% deal with Trump. But it is ready to use the bazooka

The EU has an offer ready for a tariffs agreement with the US, but is keeping its 'bazooka' in store in case of failure. The proposal was leaked to the media just hours before the expected meeting between the President of the European Commission Ursula von der Leyen and Donald Trump on the sidelines of the Canadian G7, where the tycoon landed with a large government delegation, including Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer.

Brussels, according to the German business newspaper Handelsblatt, is ready to accept a fixed 10% tariffs on all EU exports to the US in the hope of avoiding higher tariffs on cars, pharmaceuticals, and electronics. Quoting senior EU officials, the newspaper points out that the offer to Washington would only be made under certain conditions and would not be permanent. Brussels, in return, would be ready to reduce tariffs on US-made vehicles and possibly change technical or legal barriers to facilitate the sale of American cars in Europe. The EU has also offered to completely ban purchases of Russian natural gas, potentially creating more demand for US LNG producers.

"The intention is to build a comprehensive package" so that the US president can present it as "a significant political victory", the same EU sources explained.

Reducing bureaucratic and regulatory burdens already envisaged, such as easing the due diligence directive, is also among the hypotheses on the table. Brussels' position stems in part from the knowledge that Trump will rely on some tariff revenues to finance the maxi-tax cuts in the spending bill under consideration in Congress. US negotiators, however, have so far not agreed to limit import tariffs on EU cars to 10%. "Chairwoman Ursula von der Leyen has spoken with Donald Trump" and "they have agreed to continue work to reach an understanding on tariffs by 9 July," a European Commission spokesperson was limited to saying.

No confirmation, however, on the possibility of Brussels accepting an agreement with Washington based on fixed tariffs of 10%, nor on any new meetings scheduled this week between EU Trade Commissioner Maroš Šefčovič and US negotiators. The commitment to find a solution by 9 July was also reiterated on the eve of the G7 by von der Leyen herself, who nevertheless warned that, should the outcome not be satisfactory, 'we will be able to respond: all means are on the table'. This is a reference to the bazooka, i.e. the retaliatory measures that Europe is ready to trigger up to EUR 120 billion. Von der Leyen also sent out another message on the eve of the G7, hoping that the Group of Seven would send a message against protectionism.