Two Deals in the Bag: UK and Vietnam Lead US Trade Agreements

As President Trump’s July 9th tariff deadline looms for the European Union, only two deals have been successfully concluded by the US so far: with the UK and Vietnam. With just two days left for the EU to secure a deal, it faces the threat of 50% tariffs on its imports, and potentially 70% on others. This uncertainty has already caused businesses worldwide to halt investments, and the dollar to post its worst performance in 50 years. The EU is in a critical internal debate: a deal at any cost, or holding out for a better agreement.
US Treasury Secretary Scott Bessent confirmed that talks, which continued over the weekend, are focused on securing a range of agreements with important partners. The aggressive stance of the Trump administration, with Trump once labeling the EU “nastier than China,” has been a consistent feature of these talks. A recent illustration of this aggression was the threat of 17% tariffs on EU food imports made to Trade Commissioner Maroš Šefčovič during talks with senior US officials.
The impending deadline raises questions about the EU’s ability to achieve anything more than a “political framework agreement” to extend talks, potentially leaving the existing 10% baseline tariff and other levies on cars, steel, and aluminum in place. European industries are bracing for increased costs, anticipating a minimum 10% tariff on exports to the US, a significant five-fold increase from the 2% average before Trump’s election last year. This strategic shift follows the EU’s acknowledgment that a comprehensive trade deal is no longer attainable.
Consequently, the EU is now aiming for an agreement in principle, or a “framework deal,” similar to the one recently implemented with the UK. While EU diplomats initially dismissed the UK deal as inadequate and potentially non-compliant with WTO rules, and had hoped their greater economic scale would secure a better outcome, they now recognize that a minimalist deal may be the most achievable outcome under the circumstances.