The European Union expects trade talks with the United States may stretch beyond President Donald Trump’s July 9 deadline.

An initial agreement on deal principles by then is seen as the best-case scenario.

These talks aim to avoid a 50% tariff on nearly all EU exports to the US, worth around €380 billion (US$434 billion).

If imposed, the EU is likely to respond with retaliatory measures.

Negotiations cover sectors like steel, aluminum, cars, pharmaceuticals, semiconductors, and civilian aircraft.

While discussions are constructive, progress is tough due to US demands.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Trade wars come with measurable economic costs for both sides

Current tariff threats could have significant economic impacts beyond political headlines, with specific numbers showing the stakes.

Economic forecasts estimate that the proposed US tariffs could reduce US GDP by 0.6-1% due to increased import prices and decreased exports, while the EU’s GDP may decline by approximately 0.2% 1.

For American households, the Yale Budget Lab projects a $2,500 per household loss (in 2024 dollars) from higher prices, alongside an estimated 376,000 job losses across the US economy 2.

The regressive nature of tariffs means lower-income households bear a disproportionate burden relative to their income, a pattern consistently observed in economic analyses of trade barriers 3.

These projections explain why both sides are seeking a compromise despite political pressure, as the economic pain would be substantial and broadly distributed.

2️⃣ Modern supply chains amplify the impact of tariff decisions

The EU-US trade relationship is far more complex than finished goods crossing borders, with deeply integrated production networks making tariffs more disruptive than in previous eras.