EU struggles to finalise US trade deal under threat of higher auto tariffs

EU lawmakers and governments aim on Wednesday to finalise a deal scrapping duties on U.S. imports under renewed pressure from President Donald Trump, though divisions over safeguards dim chances of a swift agreement.

Trump said on Friday he would increase tariffs on EU cars and trucks to 25% this week, from 15% currently, because the EU was not complying with the terms of a deal struck in Scotland last July.

Many EU countries want to ward off that threat and are pushing for swift implementation of legislation to remove import duties on U.S. industrial goods and grant preference access to U.S. farm and sea produce, as set out in the trade accord.

However, nine months after the deal was struck, the European Parliament and the Council, the body representing EU governments, still have to agree a common text before the duty reductions can enter force.

LAWMAKERS WANT TOUGHER SAFEGUARDS

EU lawmakers want tougher safeguards, including suspending the deal if the U.S. fails to comply, making tariff cuts conditional on U.S. action, and ending EU tariff concessions entirely on March 31, 2028.

EU governments had little appetite for inserting such items, one EU diplomat said. Another said the two sides were still far apart, with further talks likely to be required next month.

Manfred Weber, president of the centre-right European People's Party, the largest group in the European Parliament, said he wanted to see a final vote in the EU assembly in May.

However, that appears ambitious given a number of political groups believe Trump's latest threat means strong safeguards are essential. 

The car tariff threat cast a shadow over a meeting of G7 trade ministers meeting in Paris on Wednesday.

German Economy Minister Katherina Reiche, whose country would be among those hardest hit by the car tariff increase, said she was in intense talks with U.S. officials and was hopeful they would 'solve this challenge.''

EU Trade Commissioner Maros Sefcovic said he would be heading to Brussels to attend the negotiations later in the day.