The US has threatened to hit EU agricultural exports with 17 per cent tariffs in a twist to its trade conflict with Brussels, three people briefed on the discussions said.
Such tariffs would hit everything from Kerrygold butter to Belgian chocolate and olive oil from the Continent, all of which are big sellers in the US.
The eleventh-hour move, which EU officials characterised as an escalation of the transatlantic dispute, came ahead of a July 9th deadline to agree a deal between the two trading giants.
US president Donald Trump imposed a 20 per cent “reciprocal” tariff in April but reduced it to 10 per cent until July 9th to allow for talks.
Until recent days, EU officials had been expecting that talks with the US would hold duties at the baseline rate.
It was unclear if the 17 per cent on foodstuffs would be in addition to the other tariffs announced by Mr Trump or instead of them.
Mr Trump has demanded that Brussels give American companies wide-ranging exemptions from regulations and cut its trade surplus with the US, but EU officials have rejected Washington’s latest proposals on any such exemptions and food tariffs.
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The EU is trying to secure its own carveouts for some products. One Brussels official said aircraft parts and spirits are among goods for which the bloc is seeking exclusions.
They said that the two sides were working on a five-page draft “agreement in principle”, but this has very little agreed-upon text in it.
Ursula von der Leyen, the European Commission president, said on Thursday that she hoped for an agreement in principle that would allow the sides to keep talking pending a final deal.
However, Washington is pushing countries to agree binding deals by Mr Trump’s deadline.
Maroš Šefčovič, the EU trade commissioner, was warned of the proposed 17 per cent duties on agri-food on Thursday during meetings in Washington. The 27 member state ambassadors were informed on Friday.
The value of EU agri-food exports to the US, including products such as wine, totalled €48 billion last year.
Mr Šefčovič has repeatedly characterised the changing of EU regulations to suit the US as a red line. However, the EU is also on a deregulatory drive, weakening some environmental laws.
EU countries are divided between accepting some higher tariffs in return for a period of certainty and those who wish to retaliate to put pressure on the US to compromise.
Friedrich Merz, chancellor of Germany, the EU’s biggest and most export-dependent economy, has been pressing the commission, which runs trade policy, to settle for a quick deal. He is anxious for exemptions from Mr Trump’s sectoral tariffs of 25 per cent on vehicles and 50 per cent on steel.
However, several ambassadors intervened in Friday’s meeting to press for stronger action against Washington, said two people briefed on the meeting.
Two EU diplomats said they had been told that the US had sketched out three scenarios for July 9th: Countries with an “agreement in principle” would keep the 10 per cent tariffs, with possible further tariff relief at a later stage; for countries that failed to reach such an agreement, the tariffs would return to the level announced in April until a deal was struck; higher tariffs would be applied to countries that the US believes are not negotiating in good faith.
As the EU prepares its possible retaliation for US duties on its products, member states have already approved counter-tariffs on €21 billion of annual US exports from July 14th. The commission is assembling a package of €95 billion more, including on aircraft and food.
A commission representative said: “The EU position has been clear from the outset: we favour a negotiated solution with the US, and this remains our priority ... At the same time, we are preparing for the possibility that no satisfactory agreement is reached.”
The White House has yet to respond to a request for comment. – Copyright The Financial Times Limited
