The European Union and the United States are under pressure to finalise a trade agreement before a 90-day reprieve on proposed U.S. tariffs expires on July 9. If no deal is reached, EU goods imported into the U.S. could face new duties, with retaliatory measures from Brussels potentially following soon after. Although U.S. officials have signalled a hardline stance, it remains unclear whether the EU is directly targeted by recent tariff ultimatums issued by the White House.
The trade relationship between the two partners is among the largest globally, representing around 30% of total world trade in goods. In 2024, bilateral trade in goods and services reached approximately €1.68 trillion (US$1.98 trillion). The EU posted a surplus of €198 billion in goods but ran a €148 billion deficit in services, resulting in an overall annual trade surplus of about €50 billion.
Progress toward a comprehensive agreement has been limited. EU leaders have acknowledged that completing a full trade deal within the existing timeframe is unrealistic, and are instead seeking a preliminary political understanding that could serve as a foundation for future negotiations. High-level discussions have continued in Washington, but U.S. officials have expressed uncertainty about the likelihood of a breakthrough before the deadline.
Analysts suggest that a narrow agreement, potentially involving an acceptance of baseline tariffs in exchange for further dialogue, may be the most viable short-term outcome. However, such an arrangement would likely remain unstable, subject to ongoing negotiations and political shifts. Observers expect the EU to delay any retaliatory measures unless the U.S. imposes the full scale of threatened tariffs next week.
