The European officials have been preparing for a 10% baseline tariff to be included in any future trade agreement with the U.S., according to five sources close to the negotiations.
President Donald Trump has demanded that the U.S. trade deficit with the EU be reduced through sweeping tariffs and Commerce Secretary Howard Lutnick has stated that the U.S. will not accept anything less than a 10% tariff. The EU negotiators continue to advocate for a lower tariff rate but insiders acknowledge that the U.S. position is proving difficult to shift especially as tariff revenues increase.
“Ten percent is a sticking point,” said one EU official. “They’re collecting money now, which makes it harder to walk back.”
The talks are intensifying as the July 9 deadline approaches and the reciprocal tariffs could reach as high as 50% on various goods. Washington is also seeking to expand the talks to include digital taxes, LNG, food safety, and ESG reporting rules.
The EU has more to lose than the UK in the trade talks because it has a $236 billion goods trade surplus with the U.S. in 2024. Trump has argued that tariff revenues are essential for funding his broader economic agenda which includes tax cuts and spending packages.
