EU clears major hurdle to finalize U.S. trade pact — and sidestep Trump tariff hikes

EU lawmakers welcomed the breakthrough after more than five hours of talks overnight, saying it likely paves the way for the 27-nation bloc to avoid a threat by U.S. President Donald Trump to punish a further delay with higher tariffs.

The agreement includes a safeguard mechanism that would let Brussels suspend tariff reductions in the event that U.S. imports harm European industry.

It also allows the European Commission, the EU’s executive arm, to suspend tariff preferences if the U.S. continues to apply a tariff rate higher than 15% on EU steel and aluminum derivatives by the end of 2026.

The provisional agreement comes almost a year after the EU and U.S. first struck a trade deal at Trump’s golf resort in Turnberry, Scotland. Under the terms of the accord, the EU agreed to scrap tariffs on U.S. industrial goods, while the Trump administration agreed to cap tariffs on most European goods at 15%.

“A deal is a deal, and the EU honours its commitments,” the EU’s von der Leyen said on Wednesday via X. “Together, we can ensure stable, predictable, balanced, and mutually beneficial transatlantic trade.”

Earlier this month, the U.S. president said he would give the EU until July 4 to ratify its trade agreement with Washington, threatening to raise tariffs to “much higher” levels if it failed to do so.

He had also pledged to raise duties on cars and trucks imported from the EU to 25%, accusing the bloc of not complying with the terms of the so-called “Turnberry Agreement.”

The EU is now expected to meet Trump’s July 4 deadline, with a vote for final approval expected to take place in mid-June.

Europe has “avoided a damaging escalation of transatlantic trade tensions and protected European companies, investments and millions of jobs on both sides of the Atlantic,” Željana Zovko, the lead negotiator in the European People Party’s group on the U.S. trade deal, said on Wednesday.

Bernd Lange, the European Parliament’s chief trade negotiator, described the process as a “rocky journey” but one that was worthwhile.

“By setting the commitments under the joint statement into law, this regulation becomes part of the EU’s toolkit to improve EU-US relations but also responds to pressure,” Lange said in a statement.