US president reportedly seeks 15–20% minimum tariff in EU trade deal; Brussels mulls retaliation
Donald Trump is demanding a minimum 15% to 20% tariff on all goods imported from the European Union, according to the Financial Times, raising the stakes in high-level negotiations ahead of an August 1 deadline that could see sweeping new trade barriers imposed.
The US president’s hardened stance reportedly aims to test the EU’s “pain threshold” after weeks of talks on a potential framework agreement that would have preserved a 10% baseline tariff, similar to the UK’s arrangement. According to three people briefed on the talks, Trump has also dismissed the EU’s recent offer to reduce car tariffs and is willing to keep the 25% levy on the sector in place.
One US official told the FT that even in the event of a deal, Washington is now looking at a reciprocal tariff floor exceeding 10%. Without an agreement, Trump has said he will unilaterally impose a 30% tariff on all EU imports beginning August 1.
The EU’s top trade official, Maroš Šefčovič, reportedly delivered a pessimistic update to ambassadors on Friday following a trip to Washington. “Whether we can still create sectoral rules is an open question,” German Chancellor Friedrich Merz said Friday, warning that Washington remained sceptical about exemptions for specific industries. “The American side views it more critically.”
The latest FT report triggered a modest pullback on Wall Street, with the S&P 500 falling as much as 0.2% intraday and the Dow shedding over 250 points.
EU weighs retaliation
Brussels is under pressure to avoid capitulating to US demands, but internal divisions over retaliatory measures persist. Still, diplomats signalled a shift in tone.
“We don’t want a trade war, but we don’t know if the US will leave us a choice,” one senior EU official told the FT. A second added: “The mood has clearly changed. We are not going to settle at 15%.”
The EU has prepared multiple retaliatory packages, including:
- A €21bn annual tariff package targeting US goods such as chicken and jeans, which could take effect August 6.
- A broader €72bn list targeting aircraft, bourbon, and other products.
- A third list under development, potentially including levies on digital services and online advertising.
The US tariffs—if enacted—would cover €380bn of annual EU exports, roughly 71% of the bloc’s €532bn total exports to the US, its largest single market.
Strategic and political implications
Trump’s demands come as part of a broader effort to reset trade relationships globally. Over the past month, he has announced or threatened tariffs on Canada (35%), Mexico (30%), Brazil (50%), and over 150 other trading partners.
While economists have warned the policy risks fuelling US inflation, Trump has been emboldened by only a modest rise in consumer prices and a surge in customs revenue—nearly US$50bn in the June quarter.
EU officials are reportedly pursuing a four-part strategy: continue negotiations, prepare countermeasures, compare positions with other affected countries, and enhance European competitiveness.
Michal Baranowski, Poland’s undersecretary for economic development, said the US–EU economic relationship is too vital for either side to risk long-term damage. However, unless talks produce a breakthrough in the next 12 days, both sides may face a new era of escalated tariffs.
