Negotiators from the European Union are moving towards accepting US import tariffs of 15 per cent as the price of a deal in ongoing trade talks with Washington.
Discussions are continuing as part of the EU’s attempt to cut a deal with Mr Trump to avoid steeper tariff rates that would in effect choke off transatlantic trade.
Current negotiations centre on a possible deal where the EU would agree to tariffs of 15 per cent on goods sold to the US. Such an agreement would include exemptions for some sectors of the European economy.
It is understood spirits, aircraft and some medical devices are in the frame potentially to dodge US import duties. Sources in Brussels stressed many points of the negotiations were all still subject to change, with any agreement needing to get sign off from Mr Trump.
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Two sources in Dublin with knowledge of discussions said there was an expectation the negotiations would end up with a 15 per cent tariff on EU goods, though both insisted a deal is by no means a foregone conclusion.
The negotiations, they said, are proving extremely difficult. A 15 per cent tariff could have significant implications for the Government’s October budget. It is likely to dampen growth, affect tax revenues and put pressure on the public finances.
European businesses have faced tariffs of 10 per cent since early April, with steel products and cars sold into the US subject to higher levies.
The European Commission, the EU executive body that has been leading the negotiations, was confident that enough had been done to land a deal a week and a half ago. That “agreement in principle” would have locked in much of the existing tariffs Mr Trump has put on EU trade.
However, negotiations were set back when Mr Trump threatened to triple tariffs charged on EU trade to 30 per cent from August 1st in a bid to squeeze further concessions from Brussels.
Import duties of 15 per cent would reflect the rate charged on Japan, in a tariff deal agreed between Washington and Tokyo. The UK has agreed to a 10 per cent rate.
It is unclear whether the current talks will settle the question of potential import taxes Mr Trump has promised to levy on pharmaceuticals, a sector that accounts for the bulk of the Republic of Ireland’s huge flow of trade to the US.
EU trade commissioner Maros Sefcovic spoke to US commerce secretary Howard Lutnick by phone yesterday. Senior commission officials later briefed Brussels-based diplomats about the state of play in the talks.
The 15 per cent figure would be the total tariff rate, inclusive of existing US import duties on various goods that were in place before Mr Trump took office, one EU diplomat said afterwards.
The commission is preparing a range of retaliatory tariffs on US goods in the event efforts to secure a deal collapse. Counter-tariffs of 30 per cent would be levied on about €90 billion worth of US trade, hitting the aviation and automobile sector, steel plants, bourbon whiskey, farm produce and a range of consumer products.
EU states are today expected to give the sign-off to those retaliatory measures, which will be kept in reserve while talks continue.
On Tuesday, Ministers Paschal Donohoe and Jack Chambers said they would revise their plans to spend an additional €9.4 billion on budget day if the US imposed higher tariffs.
They promised to protect investment spending on infrastructure, but signalled current spending would take a hit, meaning less money for welfare increases, public services and tax cuts.
