The European Union (EU) and the United States (US) have agreed to expedite trade negotiations to prevent a possible trade war.

This decision follows a phone call on May 25, 2025, between EU Commission President Ursula von der Leyen and US President Donald Trump.

Following the call, Trump has postponed the deadline for imposing 50% tariffs on EU goods until July 9.

“We had a very nice call and I agreed to move it,” he told reporters.

If enacted, the tariffs could affect US$321 billion worth of transatlantic trade, according to Bloomberg Economics.

EU Trade Commissioner Maros Sefcovic was set to meet with US Commerce Secretary Howard Lutnick on May 26, 2025. Additionally, EU ambassadors held an emergency meeting to discuss the latest developments in the ongoing negotiations.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Historical cycle of US-EU trade tensions repeats with familiar patterns

The current escalation follows a similar trajectory to 2018 when the US imposed steel and aluminum tariffs on the EU, citing national security concerns, which prompted EU retaliation1.

These disputes consistently revolve around agricultural access, a persistent sticking point where the US demands greater market entry while the EU remains protective of its farming sector2.

Trade negotiations between the US and EU have historically followed cycles of tension, threats, deadline extensions, and eventual compromise, as seen with the July 2018 agreement between then-President Trump and EU Commission President Juncker to avoid further tariff escalation3.

Each negotiation attempt has featured similar obstacles: the US pushing for agricultural inclusion while the EU emphasizes industrial goods, creating a fundamental disconnect that has stalled progress across multiple administrations3.

The pattern of eleventh-hour deadline extensions, as just occurred with the July 9 postponement, has been a recurring feature of transatlantic trade negotiations, demonstrating how political pressure often drives the negotiation timeline rather than substantive progress.

2️⃣ Economic analyses reveal tariffs would inflict substantial bilateral damage

Multiple economic projections show Trump’s threatened 50% tariffs would reduce US GDP by 0.6-1.0% while increasing consumer prices by more than 0.3%, creating a significant drag on economic growth4.