EU fails to finalise US trade deal
- The EU failed to lock in its U.S. trade deal in overnight talks on May 6-7, leaving Donald Trump’s threat of 25% auto tariffs alive. - The holdup is over ratifying tariff cuts on U.S. goods promised in the 2025 framework deal, while Brussels stays split on concessions. - That matters because the fallback is a jump from 15% to 25% on EU vehicles — and France is openly floating retaliation.
Trade policy is back in the ugly part — the part where a half-finished deal can still blow up into a tariff fight. Overnight talks in Brussels failed to finalize the EU side of a U.S. trade accord that has been hanging around since the two sides struck a framework last July. That leaves President Donald Trump’s threat hanging over European carmakers: if the bloc does not finish what Washington thinks it promised, U.S. tariffs on EU vehicles could rise from 15% to 25%. (bloomberg.com) ### What actually broke overnight? EU governments and the European Parliament met late on Wednesday, May 6, to try to close the remaining gaps on legislation needed to implement the deal’s tariff changes. They did not get there. Cyprus, which currently holds the EU’s rotating presid(bloomberg.com) “some way to go.” (bloomberg.com) ### What deal are they trying to finish? This is the follow-through to the U.S.-EU framework agreement reached in July 2025. The basic trade-off was simple but painful for Europe: most EU exports to the U.S., including cars, would face a 15% tariff instead of the 30% Trump had threa(bloomberg.com)ce and harder to ratify line by line. (politico.eu) ### Why are cars the pressure point? Because cars are where the threat is most concrete. Trump said last week he could raise tariffs on European cars and trucks to 25% if the EU does not deliver. For Germany, that is a direct hit to one of the bloc’s biggest export engines. And for the wider EU, autos are the (politico.eu)digitaldealer.com) ### Why can’t the EU just sign off? Because “the EU” is not one actor here. The Commission negotiates, but member states and the European Parliament both have to live with the details. Some governments want to move quickly to avoid a tariff escalation. Others are more reluctant to give Washington extra concessions under pressure. Overnight, those internal splits showed up again. (bloomberg.com) ### Where does Macron fit in? France is signaling that it does not want Brussels to negotiate with a gun to its head. Emmanuel Macron has revived talk of the EU’s anti-coercion instrument — the so-called trade “bazooka.” That tool could let the bloc answer U.S. pressure with levies, (bloomberg.com)o know retaliation is not off the table. (semafor.com) ### Is this just posturing? Not entirely. The U.S. and EU trade relationship is huge — about €1.7 trillion in goods and services in 2024, or roughly €4.6 billion a day. That scale cuts both ways. It gives both sides reasons to avoid a full trade war, but it also means even a sector-specific tariff jump can ripple fast through supply chains, prices, and investment plans. (business-standard.com) ### What happens next? More talks, basically. EU negotiators are still trying to convert the 2025 handshake into something durable enough to satisfy Washington and survivable enough for Brussels. But the leverage has shifted. Instead of celebrating a finished pact, Europe is negotiating under a live threat that the car tariff could jump within days if Trump decides the bloc is stalling. (news.bloomberglaw.com) ### Bottom line? The real story is not that the deal collapsed — it has not. It is that the unfinished parts suddenly matter again, because the U.S. has turned delay into leverage and Europe still has not agreed on how much pressure to absorb before pushing back. (bloomberg.com)
