A big,
beautiful EU trade deal with Trump? Dream on!
European
politicians have no appetite to give Trump big concessions and revisit the
inflammatory topics that dominated the TTIP talks a decade ago.
Donald Trump
is already celebrating that his tariff threat has forced the EU to stop
"slow walking" and make a deal. |
May 27, 2025
6:57 pm CET
By Camille
Gijs
BRUSSELS —
Don't expect Europe and the United States to strike a far-reaching trade deal
just because U.S. President Donald Trump is threatening to impose tariffs of as
much as 50 percent on EU goods by July 9.
Europe has
no political appetite to revisit the nightmare of its last attempt to forge a
sweeping EU-U.S. trade pact — the Transatlantic Trade and Investment
Partnership. Hailed back in 2013 as an attempt to forge a Western trade bloc
against China, the TTIP talks buckled three years later as European politicians
found it an impossible sell.
Little has
changed.
A rushed
deal to satisfy America's core trade interests nearly a decade later would
prove equally traumatic and toxic. France and Germany know their electorates
have not tempered their hostility to chemically rinsed chicken and still fear
U.S. corporates would use international arbitration clauses to undermine EU
health and environmental standards.
So how can a
full-blown trade war be averted by July 9? At most, a cosmetic mini-truce could
be in the offing to give Trump a symbolic political win.
Trump is
already celebrating that his tariff threat has forced the EU to stop "slow
walking" and make a deal. While this mini deal may identify some
low-hanging fruit, it is many miles from the vaulting ambition of TTIP, which
envisioned regulatory alignment across the Atlantic.
Diplomats
and officials say two separate tracks are now in play. EU trade chief Maroš
Šefčovič and U.S. Commerce Secretary Howard Lutnick will seek to cool tensions
over metals, cars, pharmaceuticals and other sectors targeted by Washington’s
trade investigations. A separate, more technical track will negotiate the
baseline tariff, which is currently at 10 percent although Trump is threatening
to lift it to 50 percent.
This isn't
exactly new. Brussels has already offered to drop its (relatively low) tariffs
on industrial goods and to team up on tackling the glut in Chinese exports.
To sweeten
the deal, other potential tidbits include recognizing U.S. safety standards on
cars and dropping duties on American ethanol, although both face political
headwinds in the EU.
But it's all
a far cry from discussing major agricultural concessions, the alignment of
standards, or how multinationals can sue European governments — topics that
proved fatal 10 years ago. In 2025, Paris and Berlin are being very clear on
the limits of what can be agreed.
No TTIP
redux
Germany’s
new Chancellor Friedrich Merz, a convinced transatlanticist on a mission to
save his country’s ailing car industry, has toned down his campaign claims that
sealing a TTIP 2.0 “in the medium term” was a good idea.
“Today we
know how valuable that could have been,” Merz said in early May after a call
with Trump. “Sadly, that’s spilt milk.”
Germany’s
new Chancellor Friedrich Merz, a convinced transatlanticist on a mission to
save his country’s ailing car industry, has toned down his campaign claims that
sealing a TTIP 2.0 “in the medium term” was a good idea. |
French
Finance Minister Éric Lombard dared to revive the ghost of TTIP — only to be
put back in his box a day later by the office of French President Emmanuel
Macron. The French don't want their restive farmers covering the Champs-Élysées
with straw and manure.
Jean-Luc
Demarty, head of the European Commission’s trade department during the TTIP
negotiations, also shivered at the idea of a return to that kind of
wide-ranging diplomacy. “That would be a very serious mistake. It would get us
nowhere ... I led them for [several years] and I've seen that it was an
impossible negotiation,” he told POLITICO.
An added
disincentive to making concessions to Trump is that he has shown he will
happily tear up any deal that he strikes — as the Mexicans and Canadians have
discovered. Even if a tariff-free TTIP structure had been in place, Trump would
presumably have pushed for more.
“Being part
of a free-trade agreement is no guarantee that you will not be subject to these
tariffs. Even if TTIP existed, I don't know that that would certainly have
prevented what's happening right now,” said Josh Lipsky, senior director at the
Washington-based Atlantic Council think tank.
Fraying
trust
Since taking
office Jan. 20, Trump has antagonized the EU more than ever — slamming the bloc
as “nastier” than China and insisting it was created to “screw” the United
States.
Brussels has
meanwhile been frustrated as its appeals for universal tariff disarmament have
fallen on deaf ears.
Its
negotiating partner in Washington is also highly erratic.
“This is a
different Trump administration: Under TTIP and under what happened straight
afterward, there were still very experienced people on the U.S. side, even if
one didn't like what [former U.S. Trade Representative] Robert Lighthizer said.
He was still a very experienced trade negotiator,” said David Henig of the
European Centre for International Political Economy.
Today, “they
don't know what they're looking for, but it doesn't seem like what they are
looking for is likely to be any kind of an orthodox deal,” he added.
So, in a bid
to salvage what’s left of the €1.6 trillion transatlantic trade relationship,
the EU is placing its bet on modest progress. If TTIP wasn't possible when
negotiators were more or less pulling in the same direction 10 years ago, it's
even less viable now.
“TTIP was
already very hard to do at the time when we were actually negotiating it, even
if at that point both sides shared common objectives,” said Ignacio García
Bercero, who was then the EU’s chief negotiator for the deal.
“It became
very clear that it was going to become extremely hard to find a way to reach an
agreement that the European Union would have been able to present as being
balanced. And that was in totally different circumstances than the ones that we
are having today,” he said.
Doomed deal
Puffed by
its proponents as the biggest bilateral trade agreement ever, TTIP initially
seemed straightforward, such were the huge potential economic benefits for both
sides. Then-trade commissioner Karel De Gucht said it would put up to an
additional €545 in the pockets of European families every year.
But a
political backlash over the secrecy of the talks as well as worries over
environmental, health and labor standards eventually doomed the agreement.
EU trade
chief Maroš Šefčovič and U.S. Commerce Secretary Howard Lutnick will seek to
cool tensions over metals, cars, pharmaceuticals and other sectors targeted by
Washington’s trade investigations. |
An obscure
arbitration scheme, known as the investor-to-state dispute settlement
mechanism, heightened tensions because it was seen as giving disproportionate
power to multinationals in challenging European rules.
“It was a
mistake. We should never have negotiated about that issue with the United
States,” García Bercero said.
Bad deal
then. Bad deal now.
Trump had
originally set an impossible June 1 deadline to do a deal before 50 percent
tariffs kicked in. After a “very nice call” with von der Leyen, however, the
two sides pushed the deadline to July 9.
But the EU’s
own red lines, such as respect for global trade rules, suggest a bona fide deal
won't be in reach.
“If you are
the EU and you wish to guard all your regulatory space, you wish to guard your
agricultural sector, but you also wish to [get rid of the] 10 percent tariffs,
or his tariffs on steel or anything … You've got big demands there if you're
the EU,” said Henig from the European Centre for International Political
Economy.
An agreement
recognizing U.S. standards on car safety — something that also sank the TTIP
talks — could help bring more American cars to the EU, although it’s a long
shot and has been under fire from safety groups.
Brussels
could also take a page from the U.K.’s agreement with Trump and allow U.S.
ethanol into the EU duty-free, but the European industry is already warning of
adverse consequences.
“A similar
deal with the EU would mean the same threat for the industry in Europe, where
farmers are subject to stricter regulations and without [genetically modified]
crops,” said a spokesperson for ePURE, the European renewable ethanol
association.
All in all,
even if the EU is determined to make some kind of deal work this time around to
appease Trump, the mood is one of pervasive fatalism that the U.S. will not
prove an honest broker.
“It was a
bad deal the first time around. They rolled over us and they would do it
again,” an EU diplomat said.
This story
has been updated.
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