EU plans concessions for Trump after reciprocal tariffs hit

The European Union is identifying concessions it’s willing to make to Donald Trump’s administration to secure the partial removal of the US tariffs that have already started hitting the bloc’s exports and that are set to increase after April 2, Report informs via Bloomberg.

EU officials were told at meetings this week in Washington that there was no way to avoid new auto and so-called reciprocal tariffs that Trump is launching next week, according to people familiar with the talks. Discussions also began on what the contours of a potential deal to reduce them should eventually look like.

That has prompted the European Commission, which handles trade matters for the EU, to start working on a “term sheet” for a potential agreement, which would set out areas for negotiations on the punitive trade measures, including lowering its own duties, mutual investments with the US as well as easing certain regulations and standards, said the people, who spoke on the condition of anonymity.

The reciprocal tariffs are meant to strike out against what Trump considers to be unfair levies on US goods as well as non-tariff barriers, such as domestic regulations and how countries collect taxes, including the bloc’s value-added tax, digital taxes and regulations. The EU says its VAT is a fair, non-discriminatory tax that applies equally to domestic and imported goods.

A spokesperson from the commission declined to comment.

The euro briefly erased losses after the report, trading little changed on the day at around $1.0794. European bonds slightly pared gains, with the yield on 10-year German notes down three basis points to 2.74%.

Any deal negotiated by his lieutenants would still have to be approved by Trump. This term sheet would form the basis for the commission to hold talks with the US after the reciprocal duties come into effect, said the people. Those tariffs will likely hit all or most of the goods from the EU being exported into the US.

The US hasn’t indicated the tariff level it will apply on the EU but officials in the bloc expect the rate to fall between 10% and 25%, the people said. They added that any future deal would be difficult and wouldn’t restore the status quo, but would leave EU-US trade relations in a worse place than they currently are.