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United States President Donald Trump is scheduled to hold crunch talks with European Union chief Ursula von der Leyen in Scotland after weeks of intense trade talks between the two sides as Brussels aims to ink a deal with Washington to avoid a transatlantic trade war.

Von der Leyen, the European Commission president, will meet with the US president at his Turnberry golf club in Scotland on Sunday. European ministers are hoping the meeting will result in a deal to avoid the 30 percent tariffs that Trump has threatened on EU goods.

According to people involved in the talks, European negotiators are aiming for tariffs to be set at 15 percent. Trump told reporters on Friday that the bloc “want[s] to make a deal very badly”.

On July 12, Trump threatened to impose the 30 percent tariffs if no agreement could be secured by his deadline, which expires on Friday. That would come on top of the 25 percent tariffs on cars and car parts and 50 percent levies on steel and aluminium already in place.

The EU, Washington’s biggest trading partner, has been a frequent target of Trump’s escalating trade rhetoric with the president accusing the bloc of “ripping off” the US.

In 2024, EU exports to the US totalled 532 billion euros ($603bn). Pharmaceuticals, car parts and industrial chemicals were among the largest exports, according to EU data.

Will the Trump-von der Leyen meeting achieve a breakthrough and end the uncertainty in transatlantic trade ties?

What are the main differences between the two sides?

The US president told reporters at Turnberry on Friday that there are “20 sticking points”.

When asked what they were, he said: “Well, I don’t want to tell you what the sticking points are.”

At the same time, he described von der Leyen as a “highly respected woman” and predicted their meeting on Sunday would be “good”, rating the chances of a deal as “50-50”.

On the European side, it is understood that a growing number of EU countries are calling for Brussels to push ahead with an already prepared retaliatory tariffs package on 90 billion euros ($109bn) of US goods, including car parts and bourbon, if talks break down.

The two sides, which traded 1.6 trillion euros ($1.8 trillion) in goods and services  in 2023, have been negotiating since April 9 when Trump paused what he calls his “reciprocal” tariffs, which he placed on nearly all countries.

During that time, the US has been charging a flat 10 percent levy on all EU products as well as 25 percent on cars and 50 percent on steel and aluminium.

This month, EU Trade Commissioner Maros Sefcovic said: “We have to protect the EU economy, and we need to go for these rebalancing measures.”

Still, the bloc is understood to be rife with disagreement over  trade policies with the US. While Germany has urged a quick deal to safeguard its industries, other EU members, particularly France, have insisted EU negotiators must not cave in to an asymmetrical deal that favours the US.

On Saturday, von der Leyen spokesperson Paula Pinho said: “Intensive negotiations at technical and political [level] have been ongoing between the EU and US. Leaders will now take stock and consider the scope for a balanced outcome that provides stability and predictability for businesses and consumers on both sides of the Atlantic.”

What have the US and EU traded with each other?

In 2024, the US-EU goods trade reached nearly $1 trillion, making the EU the single largest trading partner of the US.

In total, the US bought $235.6bn more in goods than it sold to the 27 countries that make up the EU. On the other hand, the US earned a surplus on services trade with the EU.

The US mainly bought pharmaceutical products from the EU as well as mechanical appliances, cars and other nonrailway vehicles – totalling roughly $606bn.

The US exported fuel, pharmaceutical products, machinery and aircraft to the EU to the tune of $370bn.

Why have they struggled to ink a deal so far?

Like all the nations the US runs a trade deficit with, Trump has long accused the EU of swindling his country and is determined that Brussels adopt measures to lower its goods trade surplus with the US.

Washington has repeatedly raised concerns over Europe’s value-added tax as well as its regulations on food exports and IT services. Trump has argued that these controls act as nontariff trade barriers.

Indeed, Sefcovic recently told the Financial Times that he wants to reduce the US-EU trade deficit by buying more US gas, weapons and farm products.

And while European leaders want the lowest tariffs possible, they “also want to be respected as the partners that we are”, French President Emmanuel Macron said on Wednesday.

On July 14, meanwhile, Danish Foreign Minister Lars Lokke Rasmussen told reporters in Brussels that “we should prepare to be ready to use all the tools”.

He added: “If you want peace, you have to prepare for war.” Negotiators in Scotland are hoping it doesn’t come to that.

This month, Oxford Economics, an economic forecasting consultancy, estimated that a 30 percent tariff could push the EU “to the edge of recession”.

Countermeasures from the EU would also hit certain US industries hard. European tariffs could reduce US farmers’ and auto workers’ incomes, which are key Trump constituencies.

Published on
02/06/2025 – 13:27 GMT+2

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Brussels and Washington have little chance of breaking the trade deadlock they have been in since mid-March and the imposition of the first US tariffs on steel and aluminium, Ignacio García Bercero, a former senior EU official and expert of the Bruegel think tank, told Euronews.

“It seems to me very clear that if the US is not ready to take action to substantially mitigate the impact of the tariffs on steel, aluminium and cars. I don’t really see how it is going to be possible to reach any kind of negotiated agreement,” García Bercero said.

“The increase of US tariffs on steel and aluminium from 25% to 50% hardens the position of the US, which is the only country capable of deciding how to end the crisis.”

US President Donald Trump announced last Friday an increase in US tariffs imposed in mid-March on steel and aluminium coming into the country — including EU imports — from 25% to 50%, as of June 4.

Those tariffs come on top of 25% US tariffs on cars and 10% US levies on all EU imports.

However on 28 May, the US Court of International Trade ruled that an emergency law invoked by Trump did not give him unilateral authority to impose the 10% tariffs and ordered an immediate block on them.

The day after, a US court of appeals paused the lower court’s ruling to consider the government’s appeal on 9 June.

But the tariffs of 25% on steel, aluminium and cars were not challenged by the judges as they were grounded on a different law regarding national security.

Several investigations are currently being conducted by the US on the same legal basis into the pharmaceutical, semiconductor and aircraft industries, which could lead to further US tariffs.

“It is very clear that the US has already indicated that it is not ready to do anything on the 10% tariffs, which in any case are being challenged by a US court,” García Bercero said.

“And it now appears that it is not very easy to do anything on the other tariffs which are based on national security – the tariffs targeting steel, aluminium and cars or cars parts,” the former EU official explained.

“Quite frankly, I don’t really see how it is possible to reach any kind of agreement.”

“Therefore the EU need to adopt rebalancing action at least on steel, aluminium, cars and car parts increase,” García Bercero added.

Deadlines coming in fast

The EU has currently suspended until 15 July a first list of US products worth €21 billion to retaliate against US tariffs on steel and aluminium, after Trump decided a 90-day pause in the trade conflict until 9 July.

A second package is under discussion in Brussels until 10 June to target €95 billion worth of US goods in retaliation for the 25% tariff on cars and 10% on EU imports, if negotiations with the US fail.

Further countermeasures on steel and aluminium would need to be adopted by EU member states.

After the negotiation between the EU and the US seemed to kick off 10 days ago, the US president already threatened to impose 50% tariffs on all EU imports.

But a call between Trump and European Commission President Ursula von der Leyen eased the pressure with the promise from both sides to “fast-track” the trade talks. 

Brussels stated that it did not alter its offer in the negotiation, which includes zero-to-zero tariffs on all industrial goods and the purchase of certain strategic US products, such as energy, AI, or agricultural products.

“I’m not optimistic. But it doesn’t mean that it’s not the right tactic to continue to discuss and to see whether or not finally there is a willingness of the US to put something on the table,” García Bercero concluded.  

By Tina Teng

Published on
28/05/2025 – 7:29 GMT+2

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European stock markets extended their rally for a second consecutive trading day on Tuesday as concerns over escalating US-EU trade tensions eased. Germany’s DAX rose 0.82% to 24,226.49, marking a fresh record high, while the Euro Stoxx 600 climbed 0.33% to 552.33, edging within 0.2% of its March peak.

US President Donald Trump expressed optimism toward the trade negotiations. “I have just been informed that the EU has called to quickly establish meeting dates,” he wrote in the Truth Social, “This is a positive event, and I hope that they will, FINALLY, like my same demand to China, open up the European Nations for Trade with the United States of America. They will BOTH be very happy, and successful, if they do!!!”

The US president’s comments also lifted Wall Street, with the Dow Jones Industrial Average up 1.78%, the S&P 500 rising 2.05%, and the Nasdaq composite surging 2.47%.

On Sunday, Trump announced he had agreed to postpone the implementation of a 50% tariff on EU imports until 9 July, following a phone call with European Commission President Ursula von der Leyen. During the call, von der Leyen expressed the EU’s readiness “to advance talks swiftly and decisively” in a bid to avert further trade escalation.

Trump had initially announced 20% “reciprocal tariffs” on EU goods on 2 April before reducing the rate to 10% for 90 days. However, last Friday, he threatened to impose a 50% tariff from 1 June, citing frustration over the pace of negotiations and disagreement among EU member states.

While specific meeting dates remain absent publicly, EU Trade Commissioner Maroš Šefčovič is expected to meet his US counterpart in Paris next Tuesday during the Organisation for Economic Co-operation and Development (OECD) summit. Talks are expected to focus on removing bilateral tariffs on industrial goods and addressing US import levies on steel, aluminium, semiconductors, automobiles, and pharmaceutical products, according to sources familiar with the matter.

Earlier this month, the EU postponed a proposed package of retaliatory tariffs on up to €95 billion worth of US imports, including wine, spirits, aircraft, auto parts, electrical products, and more.

Defence and banking stocks lead gains

The DAX is up 22% year-to-date, making it the top performer among major global indices. The index had pulled back sharply in April following Trump’s announcement of the reciprocal tariffs but has consistently rebounded on signs of de-escalation in trade tensions.

In sectors, the defence and banking stocks led the broad gains, underpinned by optimism over Germany’s fiscal and defence spending reforms. In March, Germany’s Friedrich Merz announced plans to increase defence spending beyond 1% of GDP and a €500 billion special fund for infrastructure investment. The landmark fiscal package particularly lifted sentiment in European defence and industrial stocks, with Rheinmetall AG shares soaring 207% so far this year, repeatedly hitting new highs.

Meanwhile, European banking stocks have been supported by the European Central Bank’s accommodative monetary policy stance, which has bolstered investment banking income and lending activity. Shares of Deutsche Bank and Commerzbank soared 50% and 75% respectively this year.

The euro retreats

Despite the bullish momentum in equities, the euro weakened against the US dollar, as the greenback staged a strong rebound following Trump’s decision to delay tariffs — a move that mirrored previous dollar rallies during the US-China trade talks.

The EUR/USD pair fell to just above 1.13 during Wednesday’s Asian session, retreating from over 1.14 on Monday, as markets priced in renewed optimism over US-EU trade negotiations and an improved US economic outlook.