EU-US Trade Deal Framework Emerges as Brussels Eyes Unilateral Tariff Cuts

EU-US Trade Deal Framework Emerges as Brussels Eyes Unilateral Tariff Cuts

Deal Skeleton Taking Shape Before July 9

The European Union is crafting the outline of a potential EU-US trade deal, which could take effect after July 9. While the full framework is still evolving, officials hint at extending existing tariff alleviations and implementing unilateral tariff reductions on key imports such as US-made automobiles and defense goods.

EU May Accept US Tariff Baseline Without Retaliation

A pivotal part of the proposal includes the EU accepting a US baseline tariff in the 10–15% range, without launching reciprocal measures. This could help maintain market stability and avoid a renewed tariff war, especially as both parties aim to avoid political escalation.

Strategic Concessions: LNG, Autos, and Pharma

To gain traction in Washington, the EU may pledge to boost US imports, particularly in sectors like liquefied natural gas (LNG) and defense procurement. In return, European negotiators hope to secure tariff relief on autos and pharmaceuticals, two sectors heavily affected by previous trade disputes.

Regulatory Overhaul on the Table

Beyond tariffs, the EU plans to streamline regulatory hurdles faced by US firms in the European market. This effort is expected to focus on reducing administrative bottlenecks rather than cutting broader tax regimes like VAT or digital services taxes.

Risks Remain, but Deal Still Likely

While negotiations are progressing, there's still a chance of rising tensions and tariff escalations if talks derail. However, both sides have a strong incentive to avoid tit-for-tat measures, making an eventual compromise the most likely outcome.

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