President Donald Trump has escalated trade tensions with the European Union by threatening to impose a 17% tariff on food imports if the two sides fail to reach a new trade agreement by the fast-approaching July 9 deadline. This announcement has added a layer of urgency to the negotiations, which could see all EU goods entering the U.S. subjected to a staggering 50% tax if no deal is finalized.
The proposed tariffs would affect nearly $58 billion in food and farm products exported from the EU to the U.S., potentially impacting a wide range of items including wine and specialty products. The Daily Mail notes that these goods form a substantial part of the transatlantic trade relationship, which is one of the largest globally, accounting for around 30 percent of international trade in goods.
The trade relationship between the United States and the European Union is a cornerstone of the global economy. In 2024, the total trade between the two partners amounted to approximately 1.68 trillion euros, or $1.98 trillion, with the EU reporting a trade surplus in goods and a deficit in services. The longstanding partnership has been fraught with tension, however, as President Trump has consistently criticized EU trade practices, accusing the bloc of exploiting the U.S. and claiming that the EU was designed to disadvantage American interests.
Negotiations are currently focused on a five-page draft agreement that outlines a basic framework for the trade relationship, though reports suggest that only a fraction of the text has been agreed upon. With talks described as challenging and slow-moving, European Commission President Ursula von der Leyen has stated that while an "agreement in principle" is the goal, finalizing a detailed agreement within the current 90-day reprieve seems unlikely.
Von der Leyen has also made it clear that the EU is prepared to use all available trade policy tools should the negotiations not yield a resolution. Meanwhile, Treasury Secretary Scott Bessent expressed uncertainty in an interview with CNBC about reaching an agreement before the deadline, though negotiations are set to continue through the weekend.
EU negotiators have indicated a willingness to maintain a 10 percent baseline tariff on most goods in exchange for sector-specific exemptions in critical industries such as pharmaceuticals, aerospace, semiconductors, and alcohol. However, internal divisions among the 27 EU member states are complicating the process, with some countries favoring temporary higher tariffs for trade certainty, while others want to adopt a firmer stance to draw concessions from Trump.
Germany, with Chancellor Friedrich Merz at the helm, is advocating for a swift deal to secure exemptions from tariffs on vehicles and steel, which are crucial to its economy. Conversely, France, led by President Macron, is aiming for full reciprocity in any agreement, a position that could potentially delay reaching a consensus within the EU.
As the deadline looms, the Trump administration's hard-line approach signals a readiness to use significant economic levers to shape international trade agreements. The outcome of these talks could have far-reaching implications for the global economy and the future of U.S.-EU relations.
