EU to finalize U.S. trade deal following €93 billion retaliation threat

Brussels and Washington are close to finalizing a trade deal that would impose a 15 % levy on specified goods from Europe, resembling the pact the U.S. President just signed with Tokyo.

Three insiders told the FT that EU negotiators may accept the 15% levy to stop Trump’s 30% tariff hike on August 1.

They also indicate that negotiators would eliminate fees on certain products, including airplane components, spirits, and healthcare devices. This past Wednesday, the European Commission, responsible for trade across all 27 member states, updated EU representatives following recent meetings with American trade delegates.

European exporters have faced a supplementary 10% surcharge on shipments to the U.S. since April, in addition to standard tariffs that average around 4.8%.

A flat 15% tariff would cut car duties from 27.5% to15%.

Recently, Trump posted on Truth Social that he will “ONLY LOWER TARIFFS IF A COUNTRY AGREES TO OPEN ITS MARKET. IF NOT, MUCH HIGHER TARIFFS!”. He added that “Japan’s Markets are now open!” for the very first time, and this will be a boost to U.S businesses.

EU’s retaliation plan still on standby

Earlier, the Commission asked member governments to approve its €93 billion list of U.S. goods for possible retaliation, and its trade chief arranged talks with U.S. Commerce Secretary Howard Lutnick.

The plan simply merges the earlier €21 billion and €72 billion proposals into one package of reciprocal tariffs. It pledged to continue refining its own response plan until a settlement is reached, and officials stressed they would promptly deploy those countermeasures should negotiations collapse.

Markets reacted quickly. European equity benchmarks rose roughly 1 percent, led by automotive shares, as Trump’s Japan deal revived expectations for a comparable EU pact.

Analysts said the news lifted market confidence by suggesting U.S.‑EU trade tensions might ease.

The deal cuts the U.S. car tariff from 25% to 15%. EU officials see it as a template, since last year the U.S. bought over $55 billion of Japanese vehicles and parts, and about €47.3 billion (around $55.45 billion) from Europe.

EU sources report limited movement on U.S. auto tariffs, though the Tokyo accord could provide a potential blueprint.

A spokesperson for the German government pointed out that U.S.‑Japan relations differ significantly from U.S.‑EU dynamics.

UBS analysts warned that without a similar deal, Japanese carmakers would benefit.