Trump puts odds of US-EU tariff deal at 50-50 amid rising trade tensions

President Donald Trump on Friday said there is a “50-50 chance” the United States will reach a trade agreement with the European Union to reduce tariffs, even as EU diplomats have signalled greater optimism about striking a deal before the August 1 deadline.

“I would say that we have a 50-50 chance, maybe less than that, but a 50-50 chance of making a deal with the EU,” Trump told reporters before leaving for a golf trip to Scotland.

He added that negotiators from both sides were working “closely” toward a possible resolution.

Earlier this month, Trump issued a letter warning that the EU would face a 30% tariff on most exports to the US if an agreement isn’t reached by August 1.

That warning came in addition to existing sector-specific tariffs, including a 25% levy on automobiles and auto parts and even higher rates on steel and aluminium.

Trump has also threatened to impose new tariffs on pharmaceuticals and semiconductors as early as next month and recently announced a 50% duty on copper.

Trump said he plans to issue additional letters in the coming days that would unilaterally set tariff rates on imports from other countries.

He also voiced optimism about upcoming trade talks with China, which are expected to take place in Stockholm.

The US and China are within the “confines of a deal,” Trump said, though no formal terms have been disclosed.

EU pushes for lower baseline tariff and sectoral exemptions

European negotiators are hoping to secure a framework that sets a 15% baseline tariff for most exports, including automobiles, in place of higher sector-specific rates.

The EU is also pushing for a quota system that would allow lower tariffs on certain steel and aluminium products.

In addition to seeking relief on core industrial exports, Brussels is aiming for carve-outs in specific sectors such as aviation components, certain medical devices, generic medicines, spirits, and industrial equipment.

While no final agreement has been announced, EU officials believe the two sides are making progress toward a deal that could avert a broader trade dispute.

China-EU trade imbalance draws attention

Meanwhile, tensions between the EU and China were also on display at a summit held in Beijing on Thursday.

Chinese President Xi Jinping urged European leaders to make “correct strategic choices” in the face of ongoing trade friction, asserting that China is not the source of Europe’s economic challenges.

“The challenges facing Europe at present do not come from China,” Xi said. “There are no fundamental conflicts of interest or geopolitical contradictions between China and the EU.”

European Commission President Ursula von der Leyen countered that the EU’s openness to Chinese goods may not be sustainable unless trade imbalances are addressed.

She pointed to a growing disparity in trade volumes, noting that China exported 14.5% of its goods to the EU but imported only 8% from the bloc.

“These numbers speak to the scale of our relationship, but they also expose a growing imbalance,” von der Leyen said, attributing the gap to “an increasing number of trade distortions and market access barriers,” including state subsidies.

While no formal resolution was reached, the EU and China reportedly made progress toward lifting restrictions on the supply of rare earth elements—a key bottleneck in Europe’s car manufacturing industry.