US President Donald Trump has escalated his demands in trade negotiations with the European Union (EU), pushing for a minimum tariff of 15 per cent to 20 per cent in any deal with the bloc, according to three people briefed on the talks.
The US president’s hardened stance aims to test the EU’s pain threshold after weeks of talks on a framework agreement that would have maintained a baseline tariff of 10 per cent on most goods.
Mr Trump has also been unmoved by the latest EU offer to reduce car tariffs, and would be happy to keep duties on the sector at 25 per cent as planned, said people familiar with the negotiations.
Maros Sefcovic, EU trade commissioner, gave a downbeat assessment of his recent talks in Washington to the bloc’s ambassadors on Friday, said two people briefed on the meeting.
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One US official said that the administration is now looking at a reciprocal tariff rate that exceeds 10 per cent, even if a deal is reached.
The position puts the EU in a bind as it approaches an August 1st deadline, when Mr Trump said he will impose a 30 per cent tariff on all its imports.
The bloc has indicated it would retaliate over such a move, but is divided over taking countermeasures and may be forced to accept a baseline of more than 10 per cent in any deal.
US stocks dipped on news of Mr Trump’s demands, with the blue-chip S&P 500 down as much as 0.2 per cent.
In a sign of the mounting pessimism in Europe over the shape of a deal, Germany’s chancellor Friedrich Merz on Friday warned Washington remained sceptical about offers to reduce the sectoral tariffs.
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Mr Merz added: “Whether we can still create sectoral rules, whether we can treat individual sectors differently from others, is an open question. The European side supports this. The American side views it more critically.”
If Trump insists on permanent reciprocal duties of 15 per cent to 20 per cent they would be as high as they were when trade talks began in April, and could push Brussels towards retaliation, said the senior EU diplomat. The US has also imposed sectoral tariffs of 50 per cent on EU steel and aluminium.
“We don’t want a trade war, but we don’t know if the US will leave us a choice,” they said.
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A second EU diplomat added “the mood has clearly changed” in favour of retaliation. “We are not going to settle at 15 per cent,” they said.
Mr Trump sparked global stock market turmoil in early April when he imposed high “reciprocal” tariffs on almost all US trading partners, before lowering them to 10 per cent for 90 days.
US stocks have surged to record highs since April, and traders have largely shrugged off Mr Trump’s recent threats to increase tariffs on large economies including Japan, South Korea and Brazil.
Although economists have warned Mr Trump’s trade policy risks stoking US inflation, the president has been buoyed by only a minor uptick in the US monthly consumer price index this month.
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Meanwhile, the US collected nearly $50 billion (€43 billion) in extra customs revenue in the second quarter while escaping any widespread retaliation measures from its largest trading partners.
The EU has planned several packages of counter-tariffs but has repeatedly pushed back implementation, tying them to Trump’s latest deadline for talks of August 1st.
These include duties on €21 billion of annual US imports, including chicken and jeans, that would come into effect on August 6th.
The European Commission, which runs trade policy, has also proposed retaliation against €72 billion of annual US imports, including on Boeing aircraft and bourbon if talks fail.
It is preparing a third list with measures against services. A person familiar with the latest proposal said it would include levies on digital services and online advertising revenue.
US tariffs cover €380bn of annual EU exports, of a total of €532.3bn. The US is the bloc’s biggest single market, accounting for a fifth of exports.
The commission declined to comment. – Copyright The Financial Times Limited 2025
