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The European Union (EU) has said it hopes to agree a US tariff deal “in the coming days” that would avoid import taxes US President Donald Trump has threatened on its goods.<\/p>\n
Levies had been due to start on 9 July for goods entering the US from around the world, but Trump this week extended the timeline for talks until 1 August.<\/p>\n
A deal with the EU – the US’s single biggest trading partner and a frequent target of Trump’s criticism – would mark a major milestone in relations between the two powers.<\/p>\n
Despite the official confidence that an agreement can be reached, Italy’s Economy Minister Giancarlo Giorgetti said the talks are “very complicated” and could go right to the wire.<\/p>\n<\/div>\n
Other US trading partners are bracing for the possibility that Trump might move forward with his tariff plans, which were initially announced in April. <\/p>\n
After the tariffs sparked turmoil in financial markets, Trump suspended the highest duties, while keeping in place a 10% tax on most goods. <\/p>\n
On Monday, he sent letters to 14 of the US’s trading partners – including key strategic allies such as Japan and South Korea – warning them he would start collecting tariffs of between 25% and 40% on their exports starting 1 August. <\/p>\n
On Wednesday, he posted additional letters on social media that outlined tariff plans for countries including the Philippines, Iraq and Moldova.<\/p>\n
The White House in April had announced levies of 20% on European goods, which Trump later threatened to push to 50%. <\/p>\n
Moving forward with those tariffs would carry some of the biggest risks for the US economy, given the importance of the trade relationship, noted analysts at Pantheon Macroeconomics.<\/p>\n
The European Union has also said it is prepared to retaliate. <\/p>\n
But EU spokesperson Olof Gill also said in a press conference on Wednesday that the outlines of a tariff agreement appeared close.<\/p>\n
“We aim to reach a deal before [1 August], potentially even in the coming days,” he said.<\/p>\n
Trump on Tuesday offered praise for the bloc and said the White House was “probably two days off” from setting a new tariff rate for the EU. <\/p>\n
Commerce Secretary Howard Lutnick also told broadcaster CNBC that the bloc had made “significant, real offers” that would make it easier for American farmers to sell to the region. <\/p>\n<\/div>\n
Trump has separately threatened tariffs on other key items such as pharmaceuticals, announcing a 50% tariff on copper entering the US<\/a> on Tuesday.<\/p>\n Despite the tariff back-and-forth, markets in Europe rose in early trading on Wednesday, while the UK and US opened flat.<\/p>\n Dan Coatsworth, analyst at AJ Bell, told the BBC he was “very surprised” to see the muted reaction, but said “maybe markets are shrugging it off”.<\/p>\n “It’s almost like Trump is losing credibility in terms of negotiating tactics… his bark is worse than his bite,” he said.<\/p>\n He added that investors have “gone from panic mode” following the ‘Liberation Day’ announcement of sweeping tariffs on 2 April<\/a> to “wait and see mode”.<\/p>\n Some analysts describe investors’ reaction as ‘TACO’ (Trump always chickens out) trading as they question the credibility of Trump’s threats.<\/p>\n<\/div>\n