Top leaders at the European Union’s executive commission say they are working hard to reach a trade agreement with the Trump administration to avoid a 50% tariff on imported goods. Trump had planned to start the tariffs on June 1, but delayed the deadline to July 9, using a common tactic in his trade disputes.
European negotiators are dealing with Trump’s changing and unpredictable tariff threats, but “still, they have to come up with something to hopefully pacify him,” said Bruce Stokes, a visiting senior fellow at the German Marshall Fund of the United States.
Stokes believes there is more going on than just a fight over trade deficits. Trump’s threats “are rooted in frustration with the EU that has little to do with trade,” Stokes said. “He doesn’t like the EU. He doesn’t like Germany.”
What does Trump want? What can Europe offer? Here are the main points where both sides conflict.
Buy our products
Trump has repeatedly complained that Europe sells more to Americans than it buys from them. Last year, the trade deficit in goods was 157 billion euros ($178 billion). But Europe says when it comes to services—especially digital ones like online ads and cloud computing—the U.S. sells more, lowering the total trade deficit to 48 billion euros, about 3% of all trade. The European Commission says this means trade is “balanced.”
One way to change the goods trade would be for Europe to buy more liquefied natural gas (LNG) from the U.S. To do this, the EU could stop importing Russian pipeline gas and LNG. The commission is preparing rules to end those purchases, which were about 19% of imports last year—by the end of 2027.
This would push European companies to look for gas from places like the U.S. But the move away from Russia is already happening and “has obviously not been enough to satisfy,” said Laurent Ruseckas, a natural gas market expert at S&P Global Commodities Insights Research.
The commission does not buy gas directly but can use “moral suasion” to encourage companies to choose U.S. suppliers in the future. However, “this is no silver bullet and nothing that can yield immediate results,” said Simone Tagliapietra, an energy analyst at the Bruegel think tank in Brussels.
Europe could increase purchases from U.S. defense contractors to help deter further Russian aggression after the invasion of Ukraine, said Carsten Brzeski, global chief of macro at ING bank. If European countries raise defense spending—as Trump demands—voters will likely want to buy from European defense companies, not American ones, said Stokes. One way to solve this would be for U.S. defense firms to build factories in Europe, but “that would take time,” he said.
The EU could lower its 10% tax on foreign cars—one of Trump’s long-time complaints against Europe. “The United States is not going to export that many cars to Europe anyway… The Germans would be most resistant, but I don’t think they’re terribly worried about competition from America,” said Edward Alden, senior fellow at the Council on Foreign Relations. “That would be a symbolic victory for the president.”
President Donald Trump holds a jersey as he departs after hosting the 2025 NCAA ChampionA fight over food products
The U.S. has long complained about European rules on food and farming products that block hormone-treated beef and chlorine-washed chickens. Experts don’t expect the EU trade negotiators to make any changes here.
“The EU is unwilling to capitulate,” said Mary Lovely, senior fellow at the Peterson Institute for International Economics. “The EU has repeatedly said it will not change its sanitary rules, its rules on (genetically modified) crops, its rules on chlorinated chickens, things that have been longtime irritants for the U.S.”
Changing these rules would mean “the U.S. gets to set food safety (standards) for Europe.”
Value-added tax
One of Trump’s complaints has been the value-added tax (VAT) used by European governments, which he says is a burden on U.S. companies.
Economists say VAT, used by about 170 countries, is trade-neutral because it applies equally to imports and exports. VAT is paid by the final buyer but is calculated at every step of production. Both VAT and sales taxes treat imports and exports the same. The U.S. does not have VAT.
There is little chance countries will change their tax systems for Trump, and the EU has ruled this out.
Vehicles make their way westbound on Interstate 80 acrossNegotiation style
Trump’s way of negotiating has included threats of very high tariffs—up to 145% with China—before agreeing on much lower levels. Still, the White House says it won’t accept anything below 10%. The threat of 50% tariffs for the EU is very high, meaning “an effective trade embargo,” said Brzeski, because it would raise costs so much that importing goods would not be profitable or prices for consumers would be too high.
Because the hardest problems between the EU and U.S.—food safety, VAT, and tech company rules—are difficult, “it is impossible to imagine them being resolved by the deadline,” Alden said. “Possibly what you could have—and Trump has shown he is willing to do this—is a very small deal,” like the one he announced May 8 with the United Kingdom.
Economists Oliver Rakau and Nicola Nobile of Oxford Economics wrote that if the 50% tariffs happen, the combined economy of the 20 euro-using countries could shrink by up to 1% next year, and business investment could drop more than 6%.
The EU has offered the U.S. a “zero for zero” deal, where tariffs on industrial goods, including cars, would be removed on both sides. Trump has rejected that, but EU officials say it is still an option.
Lovely from the Peterson Institute thinks Trump’s threats are just a negotiation tactic. “In the short run, I don’t think 50% is going to be our reality.”
But she adds that Trump’s style creates uncertainty about U.S. policy that is freezing business. “It suggests that the U.S. is an unreliable trading partner, that it operates on whim and not on rule of law,” Lovely said. “Friend or foe, you’re not going to be treated well by this administration.”