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BRUSSELS, Belgium: After satisfying Donald Trump’s calls for Europe to ramp up defense spending in NATO, EU leaders in Brussels turned Thursday to the next big challenge ahead: how to seal a trade deal with the US leader.
Time is running out. The European Union has until July 9 to reach a deal or see swingeing tariffs kick in on a majority of goods, unleashing economic pain.
The European Commission, in charge of EU trade policy, has been in talks with Washington for weeks, and the leaders of Europe’s two biggest economies France and Germany on Thursday urged Brussels to move fast in search of a deal.
“France is in favor of reaching a quick agreement, we don’t want it to drag on forever,” President Emmanuel Macron told reporters after summit talks involving the bloc’s 27 leaders and EU chief Ursula von der Leyen.
While Macron said European nations “do not want a deal at any cost,” Germany’s chancellor has signalled he wants to close a deal fast — even if it means an unbalanced outcome with some level of US tariffs on EU goods.
“It’s better to act quickly and simply than slowly and in a highly complicated way,” Friedrich Merz told a press conference after the talks.
The EU has put a zero-percent tariff proposal on the table — but it’s widely seen as a non-starter in talks with Washington.
Von der Leyen said the commission had just received the latest US counterproposal, adding: “We are assessing it as we write, speak right now.”

‘Swiss cheese’ option

According to several diplomats, the goal at this point is rather to let Trump claim victory without agreeing a deal that would significantly hurt Europe.
One diplomat suggested leaders would be happy with a “Swiss cheese” agreement — with a general US levy on European imports, but enough loopholes to shield key sectors such as steel, automobiles, pharmaceuticals and aeronautics.
This would be less painful than the status quo with European companies currently facing 25-percent tariffs on steel, aluminum and auto goods exported to the United States, and 10 percent on a majority of EU products.
Merz had earlier this week taken aim at the EU’s approach to talks as overly complicated, urging “rapid, joint decisions for four or five major industries now.”
The issue was the focus of Thursday’s summit dinner, at which von der Leyen was able to test leaders’ red lines in negotiations.
If no agreement is reached, the default tariff on EU imports is expected to double to 20 percent or even higher — Trump having at one point threatened 50 percent.
White House Press Secretary Karoline Leavitt on Thursday suggested the administration could extend the July deadline but said “that’s a decision for the president to make.”

Avoiding escalation
Unlike Canada or China, which hit back swiftly at Trump’s tariff hikes, the EU has consistently sought to negotiate with the US leader — threatening retaliation only if no agreement is reached.
“We will not allow ourselves to be provoked, we will remain calm,” said Belgian Prime Minister Bart De Wever, urging the EU to avert an all-out trade war with Washington.
Talks between EU and US negotiators have intensified in recent weeks.
Trump divides the Europeans.
Hungarian Prime Minister Viktor Orban and Italian Prime Minister Giorgia Meloni are both vocally supportive of Trump — while others are more wary.
“The problem is that on behalf of the United States, we have a heavyweight dealmaker — on our side, European Union, have light capacity and capability leaders to negotiate,” said Orban.
Pro-trade countries in Europe’s north are especially keen to avoid an escalation.
The EU has threatened to slap tariffs on US goods worth around 100 billion euros, including cars and planes, if talks fail to yield an agreement — but has not made any mention of those threats since May.
The United States is also using the negotiations to try to extract concessions on EU rules — particularly digital competition, content and AI regulations, which Washington claims unfairly target American champions such as Apple, Google, and Meta.
Europeans are ready to discuss common transatlantic standards, but the EU’s digital rules are a red line for Brussels.
 

LONDON: Britain’s vehicle production declined from a year ago for the fifth successive month in May, industry data showed on Friday, as factory disruptions and US tariffs weighed on automakers.
UK car and commercial vehicle production dropped 32.8 percent from a year ago to 49,810 units last month, marking the worst percentage drop in May output since 1949, excluding the COVID-19 pandemic-hit 2020, according to data from the Society of Motor Manufacturers and Traders.
Exports to the UK’s two biggest markets, the EU and the US, declined by 22.5 percent and 55.4 percent respectively, SMMT said.
US President Donald Trump’s 25 percent tariffs on imported automobiles and parts, imposed in March, have disrupted global supply chains, added hundreds of millions of dollars in costs for manufacturers, prompted export suspensions and pushed several automakers, especially in Europe, to consider shifting production to the US to avoid the duties.
British manufacturing also contracted in May, as output, orders and employment declined.
Still, SMMT chief Mike Hawes said the UK’s trade deals, especially with the US, and a more positive relationship with the EU, provided some optimism.
The US and UK reaffirmed a previously agreed trade deal during the G7 summit in Canada earlier this month, under which up to 100,000 UK-made cars a year can enter the US at a 10 percent tariff, lower than the 25 percent rates other countries face.
In May, Britain reached a trade deal with India to lower tariffs and set quotas on auto imports, while also moving closer to the European Union on cooperation in defense, energy and agriculture.
Car production, excluding commercial vehicles, dropped by 31.5 percent in May, largely driven by model changeovers, restructuring and the impact of US tariffs, SMMT said.