POLITICO — 2025-02-19
News from Brussels
The European Union is prepared to talk with the United States about reducing its 10 percent tariff on cars as part of a broader negotiation aimed at avoiding a transatlantic trade war, a top European Union official said Wednesday.
“This would be something we are ready to discuss,” EU Trade Commissioner Maroš Šefčovič said at an event hosted by the American Enterprise Institute, a center-right think tank based in Washington, D.C., just before he was scheduled to meet with top Trump administration officials.
Šefčovič also said the EU is prepared to consider a much bigger deal with Trump that could potentially include tech regulatory issues and certain non-trade concerns, such as EU member states increasing their spending on defense.
“I know that President Trump is a big dealmaker, and there was an idea to have a kind of impressive ‘Grand Bargain’ package. So let’s discuss all these things … because I am a true believer in the transatlantic relationship,” Šefčovič said.
President Donald Trump frequently complains that the EU’s 10% tariff on passenger cars is much higher than the United States’ own 2.5% tariff. That’s one reason he is threatening to impose “reciprocal tariffs” on the EU as part of a broader U.S. action aimed at raising tariffs on countries around the world. Trump has also threatened additional tariffs on certain sectors such as autos, semiconductors and pharmaceuticals that could separately hit the EU.
Šefčovič tried to counter Trump’s complaints Wednesday, arguing the EU is a largely open market, with average tariff rates on industrial goods that are about the same as the United States’. He also noted there are “peak” tariffs on both sides of the Atlantic, including the 25% tariff that the United States imposes on pickup trucks, which he suggested should be part of any tariff negotiations.
The former Slovak diplomat also noted that while Trump focuses on the US trade deficit in goods with the EU, which totaled $235.6 bn in 2024, the United States runs a trade surplus in services with the EU.
When goods and services are combined, the US trade deficit with the EU is only about $50 bn, which equals about 3% of $1.7 tn in annual transatlantic trade.
At the same time, Šefčovič vowed to retaliate if Trump makes good on his threats to impose sweeping tariffs.
“To protect European interests, we will have no choice but to respond firmly and strictly but we do hope to avoid the scenario,” Šefčovič said. “That is why I’m here this week.”
Meetings this week: Šefčovič said he planned to underscore the benefits of strong trade for businesses on both sides of the Atlantic when he meets with senior US officials. He is meeting Wednesday afternoon with Commerce Secretary Howard Lutnick, US Trade Representative-nominee Jamieson Greer and Kevin Hassett, director of Trump’s National Economic Council. Šefčovič is also expected to meet with Sens. Mike Crapo (R-Idaho), chair of the Senate Finance Committee; and committee member Michael Bennet (D-Colo.).
“The EU sees no justification for sudden unilateral tariff increases by the U.S. Our businesses rely on economic stability, predictability and certainty on both sides of the Atlantic,” he said, adding he hoped to come away from the meeting on Wednesday with a clearer idea of what the Trump administration would like to discuss.
Tech regulation defense: Šefčovič said Brussels was willing to talk about “Big Tech” issues with the U. but indicated the EU would strongly defend its regulations, including measures such as the Digital Services Act and the Digital Markets Act.
“The Big Tech companies from US, most of them have more clients in Europe than in US. And if you look at the revenue, so it’s between 30 [percent] to 50 [percent] of the revenue is generated in the European Union,” Šefčovič said.
He also asserted the EU’s tech rules “really do not have a discriminatory nature,” despite complaints from the United States. In addition, the EU’s work to impose a “digital services tax” was done in coordination with the US to create a global system, he said.
However, Trump has put the EU and other countries on notice that he does not feel bound by the commitments the Biden administration made in international tax negotiations that took place under the auspices of the Paris-based Organization for Economic Cooperation and Development.
Trump’s nominee to be US trade representative, Jamieson Greer, also recently told Congress that he was prepared to defend American tech companies against foreign regulation by threatening tariffs if necessary. “If anybody’s regulating our digital companies, it’s going to be us,” Greer said.
On the WTO: Šefčovič also called the World Trade Organization “very important” in his remarks, but added that the international body “has to adjust” to the 21st century, and account for new discussions including those around digital services.
“What needs to be also very clearly addressed, is that the WTO mechanism is used by non-market economies,” he added, in a likely reference to countries like China that have powerful state-backed industries. “For this, I think it will be much better, much stronger, if we can do it together with the United States.”