EU and US ‘knee deep’ in talks to avert trade war, says McGrath

The European Union’s chief negotiators and their counterparts in the US are “knee deep” in talks to avert a trade war, Ireland’s EU commissioner Michael McGrath has said.

Officials are involved in tense discussions to lay out the bare bones of a deal acceptable to both sides that would head off the crippling 50 per cent tariffs US president Donald Trump has threatened to levy on EU trade after a July 9th deadline.

The EU wants tariffs charged on goods sold to the US to be “zero or as low as possible”, Mr McGrath said on Wednesday. “It won’t surprise anyone that negotiations are detailed, protracted and quite challenging.”

A blanket 10 per cent levy on imports from the EU has been in place since early April. Mr Trump paused plans for higher tariffs on EU states and other trading partners following a backlash in the financial markets.

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Officials in Brussels have privately begun to accept that a deal that avoids steeper tariff rates is likely to mean accepting 10 per cent import duties.

“We do not believe the tariffs are the solution, so we’re not conceding that any particular level of tariff represents a new baseline, it’s a negotiation which is ongoing,” Mr McGrath said.

The former minister for finance said EU trade commissioner Maroš Šefčovič was “knee deep” in talks with the Trump administration.

A EU-US deal might not be fully worked out before Mr Trump’s stated tariff deadline in two weeks’ time, he said.

“It may not be possible to have the level of detail that you would normally have in a trade agreement completed by July 9th, but hopefully we can have the outline of an agreement that can provide the stability we need,” Mr McGrath said.

The European Commission, the EU’s executive arm that sets trade policy, was busy lining up trade deals with other countries, he said. However, those would never be enough to “replace” the US, given it was Europe’s biggest trading partner.

[ EU readies retaliatory tariffs to secure better trade deal with TrumpOpens in new window ]

Separately, what was happening on the ground in Gaza was “abhorrent and untenable”, the EU commissioner for justice said.

Thousands of trucks full of food and aid were blocked by Israel at the border, while images continued to emerge of Palestinian civilians who were “clearly malnourished and emaciated”, he said.

The role of the commission when it came to foreign policy was often “misunderstood”, Mr McGrath said. The main obstacle to the EU taking firmer action against Israel was a lack of agreement between the EU’s 27 national capitals. “It isn’t open to the commission to set a new position in relation to Israel and Gaza,” he said.

“Israel of course has the right to defend itself and has the right to respond to the horrific terrorist attack Hamas perpetrated on October 7th, [2023], but it has to do so in a manner that is consistent with international law,” Mr McGrath said.

More than 55,000 Palestinians have been killed during Israel’s 20-month invasion of Gaza, which followed attacks by Hamas militants in southern Israel, where about 1,200 people were killed and 250 taken hostage.

International aid agencies continue to warn that Israel is blocking enough aid from getting into Gaza. Large numbers of people have been shot by Israeli forces while trying to pick up food and supplies at designated distribution points since Israel took over effective control of aid distribution in recent weeks.

“The international community has to work together to find a solution. We need an urgent ceasefire and we need the trucks that are waiting at the border to be allowed to enter Gaza,” Mr McGrath said.