The U.S. trade proposal that may soon be submitted to the European Union will confront it with a crucial choice: accept an offer that is not ideal or risk securing last-minute exemptions for key industries.
Earlier this week, Washington proposed a deal that would set a basic tariff of 10 percent and provide some relief to Europe's aircraft and spirits industries. Now Donald Trump's administration claims that the deal is imminent.
"The European Union, to its credit, has now made significant, real offers" to open up its markets in agriculture and other sectors, Trade Minister Howard Lutnik said. "The president has these agreements in his office and he's thinking about how he wants to handle them."
However, the document in Trump's office can hardly be described as an "agreement". Instead, it will represent a unilateral decision to set new tariff rates from August 1.
The U.S. president recently sent letters to 14 countries informing them that, in the absence of an agreement, they will face higher tariffs from early next month. These are generally considered to be countries with which negotiations have so far failed.
The European Commission, which has not yet received any such notification, says its negotiating efforts have protected the Union from the imposition of more tariffs.
"It is critical that, while other countries are facing an increase in tariffs from the United States as a result of the letters sent by President Trump, our negotiations have saved the EU from imposing higher tariffs," Maroš Šefčović, head of EU trade negotiations, told MEPs.
"The agreement on principle that we are trying to finalize is not the end, but rather the beginning of a new beginning. I see it as a fundamental framework that paves the way for a future comprehensive trade agreement between the EU and the US," Šefčović said, before moving on to another phone conversation with his US counterpart, Jamieson Greer.
The prospect of a deal poses a difficult dilemma for the EU: accept the proposal on the table or try to reach better terms after Trump postponed the deadline for imposing tariffs by three weeks to August 1.
However, Washington gave no indication in its proposal this week that it would exclude sensitive sectors such as automotive, steel and aluminium or pharmaceuticals, as requested by the EU. Nor has Brussels secured guarantees that Washington will not make further twists on tariffs.
So far, the president of the European Commission, Ursula von der Leyen, has laid out her strategy — to play mostly defensively in difficult negotiations. He's right: the EU hasn't received a letter from Trump like the ones he sent to Japan and South Korea, threatening 25 percent tariffs on all exports.
Beyond the devastating effects that such high tariffs would have on European exporters, von der Leyen is fully aware that the security of the Union is also at stake at a time of Russian aggression. That forces her trade team to tread cautiously against Trump, who, in addition to his tough stance on tariffs, has threatened to withdraw U.S. military support to Ukraine.
The Commission's negotiating tactics, so far, have largely responded to calls from some EU member states, such as Germany or Italy, for a quick deal with the US – even at the cost of potentially painful concessions.
Speaking at a Cabinet meeting on Tuesday, Trump said of the EU that "they are very tough, but now they are very kind to us and we will see what happens". The question, according to POLITICO, is whether politeness leads somewhere.
This idea is not supported by all diplomats and policymakers in Brussels. Lange, a German Social Democrat, warned that a unilateral deal might not win the support of parliament.
The U.K. and Vietnam — which have already signed agreements with the U.S. — "wanted quick results, and the U.S. ultimately emerged as the big winner," Lange warned in an interview with German newspaper RND.
The extension of the deadline "plays in the EU's favour," said David Klaiman, senior trade analyst at the ODI think tank in Brussels, pointing to pending judicial consultations in the U.S. against Trump's tariffs and demands for internal coordination within the EU.
However, this will largely depend on the EU's willingness to take a tougher stance in the negotiations. The time for the start of the first series of countermeasures is running out.
"If we do not reach a fair trade deal with the US, the EU is ready to take countermeasures," German Finance Minister Lars Klingbeale warned in recent statements.
