U.S. Treasury Secretary Scott Bessent recently stated that Switzerland and the United Kingdom had moved ahead of the European Union (EU) in negotiating a trade agreement with the United States. This move signals growing impatience from Washington regarding the EU’s slower pace in trade negotiations. Despite this warning, EU officials remain unfazed, citing the bloc’s economic size and global influence as key strengths in securing a favorable deal. They argue that the EU does not need to rush and will not accept a deal that undermines its economic interests.
High Stakes and Political Disconnect Undermine EU-U.S. Trade Deal Progress and Unity
While Brussels asserts its negotiating strength, it is aware of the high stakes involved. A $1.7 trillion transatlantic trade relationship hangs in the balance, and failure to reach an agreement could lead to a doubling of tariffs as early as July. The EU’s trade chief, Maros Sefcovic, emphasized the bloc’s firm position, stating that it will not agree to any arrangement that is unfair. His comments came just before Bessent’s remarks and after the U.S. reached a tariff-reducing agreement with China, signaling that pressure on the EU is mounting.
U.S. Pressures EU on Trade as Switzerland and UK Pull Ahead in Deal TalksOne major stumbling block in the EU-U.S. negotiations appears to be a political disconnect. President Trump’s trade strategy has left many EU officials confused, and European Commission President Ursula von der Leyen has yet to hold a formal meeting with him. Though Trump has publicly praised von der Leyen, the lack of direct communication complicates efforts to make meaningful progress. The EU insists on a comprehensive trade deal rather than a politically expedient but limited agreement similar to the UK’s.
Regulatory Barriers and Political Sensitivities Complicate EU-U.S. Trade Negotiation Progress
The negotiations face deeper structural challenges beyond tariffs. Washington has pushed for the reduction of EU non-tariff barriers, such as VAT structures and strict food and car safety regulations. However, these are politically sensitive areas in Europe and unlikely to be easily adjusted. Analysts at Eurointelligence suggest that unless the EU is willing to engage more broadly, including regulatory issues, negotiations may stagnate. Unlike the UK, the EU is less willing to compromise on these standards, further complicating the path forward.
Despite the tense climate, some observers believe the EU is managing the situation prudently. The 90-day pause in tariffs is seen as a temporary relief, not a long-term solution. Business leaders and analysts predict prolonged and difficult negotiations, with some suggesting a stalemate is the most probable outcome. Given the $9.5 trillion annual value of broader U.S.-EU trade and investment ties, a full-scale trade conflict is undesirable for both sides. However, without significant progress, the EU may still face the threat of heightened tariffs in the near future.
