(Bloomberg) — Donald Trump’s conflict with Friedrich Merz is making it harder for the European Union to finalize its trade deal with the US before new tariffs are imposed. On Thursday, Trump expressed hesitation to push...
(Bloomberg) — Donald Trump’s conflict with Friedrich Merz is making it harder for the European Union to finalize its trade deal with the US before new tariffs are imposed.
On Thursday, Trump expressed hesitation to push back his proposed 25% tax on European cars and trucks, as he is still upset with the German chancellor for his comments on the Iran war, according to a source familiar with the situation.
This has raised concerns among senior European officials who fear that if they do not finalize their trade deal by Trump's new deadline of July 4, it could lead to a downward spiral. Although officials say they are confident about meeting the deadline, they are aware that Trump's personal issues could resurface in the coming months.
This situation highlights Trump's tendency to intertwine personal grievances with policy matters. Although his anger towards Merz is unrelated to the US-EU trade agreement, he connects everything in his own way.
Currently, the two sides are in a delicate truce. Trump retreated from his previous commitment to impose higher auto tariffs immediately after speaking with European Commission President Ursula von der Leyen.
“They haven’t really kept up their end of the bargain, and that has the president pretty frustrated, but I expect that they will by the Fourth of July,” said Kevin Hassett, Director of the White House National Economic Council, in an interview with Bloomberg TV.
Representatives from both the White House and the European Commission did not respond when asked for comments.
This shift in deadline is typical of Trump’s style: make a threat before later changing his timeline. The new deadline also aligns with the timeframe that EU negotiators had in mind. Earlier this week, EU trade chief Maros Sefcovic even urged both sides to implement the deal by July.
However, Europe still has challenges to address. Germany is currently trying to repair its relationship with Trump; on Thursday, the country’s foreign minister reaffirmed that Berlin supports the US goal of preventing Iran from acquiring nuclear weapons. Meanwhile, Trump’s threat to withdraw over 5,000 US troops from Germany remains unaddressed, which could reignite tensions.
A spokesperson for the German government did not respond to a request for comments.
In addition, Europe faces its own challenges regarding the trade deal, which the US has started implementing while the EU navigates its legislative process.
The European Parliament and various EU capitals are still negotiating the text of the agreement, with lawmakers seeking to amend the deal originally negotiated by von der Leyen and Trump last July. They want to add an expiration date and conditions ensuring that the deal won’t take effect until the US fully meets its commitments.
“We are committed to the deal, but we also need guarantees if the other side doesn't follow through,” stated Bernd Lange, chair of the European Parliament's trade committee, in a comment to Bloomberg News.
EU lawmakers are not looking to change the deal's main outline, which includes the EU agreeing to a 15% tariff ceiling on most products in exchange for eliminating tariffs on US industrial goods. The bloc generally wants to ratify the agreement to avoid a significant trade conflict and provide more stability for European businesses.
This week, Trump’s team warned Europe against making substantial changes to the original agreement.
“That could limit relief, limit the benefits of the agreement, and restrict US exports to Europe,” US Trade Representative Jamieson Greer told Bloomberg TV.
Greer, who just returned from a Group of Seven trade ministers meeting in Paris, also cautioned that the US would reinstate previous tariffs if Europe does not act quickly.
“They’ve assured me they’re committed to compliance,” he mentioned during a Fox Business interview. “If that’s not the case,” he added, “the US will revert to its previous tariff structure for the EU.”
During six hours of discussions on Wednesday night, the EU was unable to reach an agreement on major unresolved issues, although participants noted that progress was being made.
“I’m sure we will find a reasonable compromise that will satisfy the European Parliament,” Lange expressed to Bloomberg News the morning after the talks.
Sefcovic agreed with this perspective.
“This significant investment of time and effort indicates that we are making substantial progress and have already achieved a lot — although, of course, nothing is finalized until everything is finalized,” he shared on LinkedIn.
EU negotiators are expected to meet again on May 19. If they can reach an agreement then, Parliament and EU capitals might ratify the deal in June.
In the meantime, officials can only hope that Trump’s growing frustrations towards Europe — and Merz — do not re-emerge. Besides his discontent with Germany, Trump has also criticized Italy's Giorgia Meloni, a supposed ally, as well as the Pope. He has even suggested the possibility of leaving NATO and is still fresh from demanding Greenland, a territory of Denmark.
After speaking with von der Leyen on Thursday night, Trump refrained from making new accusations against Europe, but he did frame the issue from a US perspective.
“I agreed to give her until our Country’s 250th Birthday,” he posted on his Truth Social platform. “Otherwise, unfortunately, their Tariffs will instantly increase to much higher levels.”