Following the landmark trade deal with Japan, U.S. President Donald Trump has shifted his focus towards negotiations with the European Union to resolve ongoing trade disputes.
On Tuesday, Trump said, “We have Europe coming in tomorrow, and the next day, we have some other ones coming in,” without providing additional details.
The European Commission confirmed that Trade Commissioner Maros Sefcovic will meet U.S. Commerce Secretary Howard Lutnick on Wednesday, stressing that “The EU’s primary focus is on achieving a negotiated outcome with the US. Intensive technical and political level contact is ongoing.”
With a deadline of August 1 approaching, the U.S. has made clear it will not extend tariff deadlines. If no agreement is reached, 30% duties on EU imports into the U.S. will commence, potentially prompting EU retaliatory tariffs targeting $21 billion worth of American goods, though these remain paused pending talks. The dispute centres on longstanding U.S. complaints over subsidies to Airbus.
The U.S.-Japan agreement, which lowers auto tariffs to 15% from 25% without limiting export volumes, has raised hopes for a similar EU deal.
Deutsche Bank analysts said, “The Japan deal has significantly raised hopes that the EU might also be able to reach a trade deal.”
Citi economist Katsuhiko Aiba added, “It is notable that auto tariffs were reduced without any cap on auto exports for a major auto exporting country, which may have implications for negotiations with the EU and South Korea.” Cars are among the EU’s top exports to the U.S.
Following news of the Japan pact, the Stoxx 600 index rose 1%, with the automotive sector gaining approximately 3.5%. Meanwhile, European Commission President Ursula von der Leyen and European Council President Antonio Costa are travelling in Asia for meetings with Japanese leaders and ahead of the EU-China summit, where trade will be a key topic.
Experts note that Trump’s protectionist policies have strained EU-China relations, with China wary of U.S. pressure on Europe. Sefcovic recently said he had “had an important video call” with China’s Commerce Minister Wang Wentao, though details were sparse.