Brussels: European Union leaders gathered in Brussels on Thursday to deliberate over fresh U.S. proposals for a trade agreement, with European Commission President Ursula von der Leyen cautioning that the outcome remains uncertain and warning that "all options remain on the table."
The urgency stems from an impending July 9 deadline, when a temporary suspension of higher U.S. tariffs could expire, potentially triggering steep duties on EU exports such as automobiles and pharmaceuticals. The bloc is under pressure to reach a unified position, but divisions remain among key member states.
Germany and France, the EU’s two largest economies, appeared to diverge in strategy. German Chancellor Friedrich Merz advocated for a “quick and simple” agreement, warning against prolonging talks. Conversely, French President Emmanuel Macron emphasized the need for a “balanced” deal, cautioning that speed should not come at the cost of fairness.
“We want a pragmatic and swift resolution,” Macron said, “but if the U.S. maintains a baseline tariff of 10%, our response must have similar weight. Our willingness to engage should not be mistaken for weakness.”
Macron also indicated France’s reservations over the long-pending Mercosur trade pact, which Germany supports in its current form. France continues to push for tougher conditions, particularly in areas like environmental and labor standards.
Von der Leyen confirmed that the EU had received a new document from Washington, described by one EU diplomat as a "two-page principles agreement" that avoided sector-specific commitments. She noted that the EU was still reviewing the proposal.
“We are open to a deal,” she told reporters. “But we are equally preparing for the scenario where no viable agreement is reached.”
Currently, EU exports are subject to high U.S. tariffs—50% on steel and aluminum, 25% on vehicles and parts, and a standard 10% on most goods, with the risk of further increases if negotiations collapse.
In response, the EU has prepared—but not yet enacted—countermeasures on €21 billion worth of U.S. goods and is weighing additional tariffs that could target up to €95 billion more. One potential measure under discussion is a digital services tax, which would primarily affect major U.S. tech firms like Google, Meta, Apple, Microsoft, and X (formerly Twitter), aiming to narrow the U.S.’s services trade surplus.
Leaders also floated the idea of creating a new trade framework with Asia-Pacific nations as a possible workaround to the stagnating World Trade Organization. Chancellor Merz suggested the initiative could eventually include dispute resolution mechanisms, noting, “Everyone knows the WTO is no longer functioning as it should.”
The summit followed a NATO meeting earlier in the week that committed to major increases in defense spending. However, financial strain is already evident among some EU states, with Spain explicitly requesting an exemption from the new spending commitments.
Beyond trade, the EU also faces pressing geopolitical challenges. Ukrainian President Volodymyr Zelenskiy urged leaders to adopt a new sanctions package targeting Russia’s energy and banking sectors, and to offer concrete steps toward Ukraine’s EU accession. He warned that delays could undermine Europe’s credibility.
“A clear political signal is essential,” Zelenskiy told the summit. “Any hesitation from Europe now would send a damaging global message.”
Energy security also remained a sticking point, as Slovakia and Hungary raised objections to the EU's plan to cut all Russian gas imports by 2027. Slovak Prime Minister Robert Fico warned he would veto the bloc’s 18th sanctions package unless his country’s energy concerns were addressed.
As tensions mount both externally and within, the EU finds itself at a critical juncture—juggling strategic trade decisions, geopolitical commitments, and internal unity.
