EU leaders split over tactics as deadline looms for Trump trade talks
According to the US treasury secretary, Scott Bessent, on Friday, the negotiations – which continued over the weekend – are focussed on 15 to 18 agreements with important partners, while Trump warned of import tax rates of up to 70% on others.
The uncertainty created by Washington has sent shock waves through the global economy. Businesses have paused investment and the dollar posted its worst performance in 50 years in the first half of the year.
With the clock ticking down to Trump's 9 July deadline, the European Commission remains uncertain how he will treat the bloc, threatening €1.6tn of transatlantic trade.
'Among member states, the big question will be whether we should reach a deal at all costs to avoid a trade war, or show muscle if the deal is not good enough,' one EU diplomat said.
The German chancellor, Friederich Merz, has said he wants a quick UK-style deal to avert a full-scale trade war, while the French president, Emmanuel Macron, favours holding out for a better deal if a rushed deal is 'imbalanced'.
Giving a flavour of the aggression shown towards the EU, which Trump once called 'nastier than China', Brussels' trade commissioner, Maroš Šefčovič, was threatened last week with 17% tariffs on food imports during talks with senior members of the Trump administration including Bessent.
After announcing punitive 'liberation day' tariffs on nearly all countries on 2 April, Trump paused them for 90 days a week later.
The US is now on the brink of launching a trade assault on dozens of countries as the 90-day period expires on Wednesday with only two deals in the bag – the UK and Vietnam.
This has raised questions about the EU's ability to strike anything other than a political framework agreement to extend talks while a baseline 10% tariff and other levies on cars, steel and aluminium remain in place.
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As talks move into the final and most sensitive stage, industries across Europe are bracing themselves for fresh challenges, deal or no deal. They expect the cost of Trump's presidency is the minimum 10% on exports to the US, five times higher than the 2% average before he was elected last year.
That is because after months of threats of retaliatory tariffs on everything from Bourbon to Boeing aircraft, the EU conceded last week that a comprehensive trade deal was unattainable.
Instead they are aiming for an agreement in principle, or 'framework deal' which will look more like the UK deal struck in May, which came into force at the end of last month.
Many EU diplomats initially dismissed the UK deal as thin and legally dubious under World Trade Organization rules, and held out hope that the bloc's greater economic clout with €1.6tn of transatlantic trade compared with the UK's £314bn (€363bn) would help it secure a better deal. But now they realise a bare-bones deal may be the best they can get.
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The Guardian
35 minutes ago
- The Guardian
Is Trump tariff deal really a win for Vietnam – or a way of punishing China?
As news spread that Vietnam would become just the second nation to reach an initial tariff agreement with Washington, shares in the clothing companies and manufacturers that have a large footprint in the country rose with optimism. Just hours later though, they declined sharply, as it became clear that the devil would be in the detail, and the most striking part of the deal might in fact be aimed at Vietnam's powerful neighbour China. Dodging the severe levy of 46% that was threatened in April, Vietnam is instead facing a tariff of 20% for many goods, and in return US products coming into the country will have zero tariffs placed on them. However, a 40% tariff will remain for so-called transshipments – a provision that is aimed at Chinese companies accused of passing their products through Vietnam, or elsewhere, to avoid US tariffs. Businesses worry that 'transshipment' is a politicised term, and that if the US defines it too broadly, many goods could be unfairly targeted. 'Vietnam is a manufacturing hub – and as a hub you take inputs from other countries and make value-added stuff in Vietnam, and then export it to other countries,' says Dr Nguyen Khac Giang, visiting fellow at the ISEAS Yusof Ishak Institute. It is unrealistic, he adds, to expect most Vietnamese goods, other than agricultural products, would be made entirely in Vietnam. What remains to be decided is: what proportion of a product should be? How transshipments will be defined under the agreement – and how this policy will be enforced – remains to be seen, but it could have significant implications for global trade and tensions with China. 'One lesson for other countries is that the US intends to use these deals to apply pressure on China,' said Stephen Olson, a former US trade negotiator. Vietnam, a booming manufacturing hub, benefited during the last Trump administration when punishing tariffs placed on China prompted many Chinese companies to shift their supply chains. However, this caused the Vietnamese trade surplus with the US to surge, attracting US ire and allegations that Vietnam was wrongly acting as a conduit for Chinese companies wanting access to the US market. China's commerce ministry spokesperson He Yongqian responded to the US-Vietnam deal on Thursday stating: 'We firmly oppose any party reaching a deal at the expense of China's interests. If such a situation occurs, China will resolutely counter it to safeguard its legitimate rights and interests.' Vietnam's manufacturing industry is closely intertwined with both the US and China. US exports account for 30% of Vietnam's GDP, while China is Vietnam's top import source, relied on for raw materials used to make anything from footwear to furniture and electronics. Vietnam is not alone in relying on China for such components, especially across electronic sectors. '[China] is completely interwoven into global supply chains,' says Dan Martin, international business adviser at Dezan Shira and Associates, based in Hanoi. If companies are expected to prove the origin of all goods, this could place an unwelcome burden on those in sectors such as textiles where margins are low, says Martin. However, he cautions that it remains to be seen whether the higher 40% tariff on transshipments will be actively enforced. It is also possible that Vietnam could benefit if US policy encourages suppliers to set up shop in Vietnam, Martin adds. Businesses are largely pausing decisions until a clearer picture emerges, say analysts. Policymakers in Hanoi remain on a diplomatic tightrope. Vietnam has long sought to balance relations with Washington and Beijing. It considers the US not only a key export market but a security partner that serves as a counterbalance to China's assertiveness. However, if Beijing considers that Hanoi is helping Washington constrain it, this risks antagonising Vietnam's northern neighbour. It could lead to economic measures from China, or pressure over the disputed South China Sea, a major flashpoint in the region, says Peter Mumford, head of practice for south-east Asia at Eurasia Group. As things stand, 'aggressive retaliation' by Beijing against Hanoi is unlikely, he says: 'Hanoi may even have given Beijing a rough indication of the steps it would have to take to secure a US trade deal.' Vietnam has made efforts to show goodwill towards China over recent months, while also courting Trump. In exchange for the 20% tariff rate, Trump said Vietnam would open up its market to US goods. US-made SUVs, 'which do so well in the United States, will be a wonderful addition to the various product lines within Vietnam', said Trump. However the market for cars remains small in Vietnam, where city streets are famously crammed with millions of motorbikes.
The Independent
44 minutes ago
- The Independent
Putin may be mocking Trump over Ukraine – but the US president won't do anything about it
European leaders have redoubled their efforts to prise Donald Trump away from Russia by warning that the US president is being 'mocked' by Vladimir Putin, alleging that Moscow is using chemical weapons in Ukraine and demanding that the US restore weapons supplies to Kyiv. The move came after Ukraine said it had endured the biggest overnight air attack of the entire war, with swarms of 500 drones and missiles intended to overwhelm already stretched air defences. Radek Sikorski, Poland's foreign minister, called for the US to end its suspension of air defence missiles and other weapons – most of which are on standby for delivery to Poland –and derided Trump's fruitless efforts to secure a ceasefire. 'Mr Trump, Putin is mocking your peace efforts,' said the Oxford-educated Sikorski. In addition, the Dutch and German governments said their intelligence services had evidence of widespread use of chemical choking agents (teargas) against Ukrainian trenches by Russian troops. These have been used to force soldiers into the open where they could be shot by Putin's forces. 'This intensification is concerning because it is part of a trend we have been observing for several years now, where Russia's use of chemical weapons in this war is becoming more normalised, standardised, and widespread," said the Dutch defence minister Ruben Brekelmans. With the recent US focus on its attacks on Iran in support of Israel, Russia has been gradually stepping up efforts against Kyiv. Ukraine's president, Volodymyr Zelensky, has been warning for weeks that his country faces a critical shortage of defensive weapons, so the announcement that the US is suspending promised weapons such Patriot air defence missiles will inevitably entrench the already strong belief that Trump has taken Putin's side after Moscow's full-scale invasion of Ukraine and that the US is no longer a real ally in the defence of Europe. Pentagon officials suggested the suspension was a 'pause' in delivery of Patriots, precision artillery and Hellfire missiles mounted on Ukrainian F-16 aircraft as part of a review of US supplies worldwide. But the US has not declared a pause in supply to any other nation. Israel is the largest recipient of US military aid by far and has recently enjoyed an uptick in supplies of bombs and missiles even as it stands accused by the United Nations of 'ethnic cleansing' and its prime minister has been indicted for war crimes by the International Criminal Court. Trump has been trying to secure a ceasefire in the Ukraine war for months. Despite Kyiv offering a 30-day pause in fighting, Putin has repeatedly made it clear that Russia is not interested while it pursues a summer offensive to carve out the east of Ukraine. Trump has suggested he is frustrated by Putin but has threatened the Russian president with no definitive sanctions. Kyiv, however, has endured having its intelligence feed from the US blinded during the Russian counterattacks to retake Kursk, seen military aid suspended, been offered no new promises of support, and forced into a mineral deal that trades future US weapons for mining profits. In March, Trump said he was very angry and 'pissed off' after the Russian president continued to swerve his attempts to get Moscow to agree a ceasefire. The pair spoke again at length on Thursday in what turned out to be, from the Oval Office perspective, another unsatisfactory call. When asked if he had any success with Putin on Ukraine, Trump was clear: 'No, I didn't make any progress with him today at all... I'm not happy about that. I'm not happy about that.' But again there was still no sign that the US was going to lift its suspension of military aid to Ukraine, let alone increase it to try to force Russia to negotiate a workable ceasefire. So Russia continues its grinding offensive, claiming this week to have captured all of Luhansk province, which it has already illegally annexed. As a precondition to any ceasefire, Putin has demanded he keep at least Luhansk, Crimea, Kherson, Donetsk and Zaporizhzhia provinces. The US has largely accepted this position as a 'given' and further insisted that in any long-term peace deal Ukraine is prevented from joining Nato and will not get security guarantees from the US to defend its future borders. So Nato's European and Canadian members are now planning, training and producing weapons to fill an American void that is widening. Kyiv has held on in spite of the massive air attacks and 'meat grinder' Russian land assaults, largely because of its superiority in drone technology. But Moscow has now forged ahead with the development of long-range wire-guided first-person view (FPV) drones and is developing AI weapons. For the last year or so Russian drone pilots have been using civilians in Kherson as target practice on training operations, with FPV drones killing several people most weeks. 'It won't be long before we see people being hunted through the streets of Kyiv by AI drones in swarms. We need to defeat Russia before that happens,' said a senior officer in Ukraine's drone warfare operations.
The Herald Scotland
an hour ago
- The Herald Scotland
Labour reshapes the retail landscape, and not for the better
These measures are costing UK retailers £5 billion this year. Indeed, the cost of employing people in entry-level jobs has risen by over 10% for full-time and 13% for part-time workers, reducing future job availability. That will also lead to change, but not for the better. We estimate these increases will threaten 13,000 part-time jobs in Scottish retail over the next three years. Read more: This matters: flexible retail roles are a vital stepping stone for many, whether it's a first job out of school or a part-time role for those returning to the workforce or with caring responsibilities. Public policies which reduce job opportunities in retail and scupper the first rung back onto the career ladder for many fly in the face of the government's welfare reforms which aim to bring more people back into the workforce. The cumulative burden of public policy is weighing on the industry, holding back investment in skills and high streets. More is in the pipeline with the Employment Rights Bill and the new extended producer responsibility for packaging levy. Any further tax hikes in this autumn's UK Budget could make things trickier still. Furthermore, some of the challenges – such as sluggish growth – have frankly been added to by ministers themselves. Last summer government figures were keen to hammer home a message about the poor state of the public finances they had inherited, underestimating the negative impact that would have on consumer sentiment. Read more: Added to the government's own decisions are those outwith its control, including international instability and the more volatile economic policy choices of the US, which have enormous implications. To alleviate international tariffs UK ministers have moved swiftly and positively to conclude trade deals with the USA, EU, and India, which should help keep down prices for consumers. Sir Keir's government has sought to tackle many of the urgent economic issues facing the nation. In addition to the trade deals this can be seen in the consequential announcements on energy and transport infrastructure and planning. A long-standing issue for retailers has been the onerous business rates system. The business rate is at a 26-year high and has to be paid regardless of profitability. From the Exchequer's viewpoint it's a steady source of revenue even during turbulent economic times. Reform has therefore proven difficult. To the UK government's credit they've accepted the retail industry pays too much and plan a permanent rates reduction for England's shops, beginning in April. Read more: That said the government needs to sand down the roughest edges of the proposals, including the misbegotten notion that larger anchor stores should be saddled with a rates surcharge to help fund the changes. This would simply make high street rejuvenation more difficult. Meanwhile, whether Holyrood will cut retailers' rates bills remains unclear. Ministers are making good on their pledge to reform the Apprenticeship Levy. This is being rebranded as a growth and skills levy and retailers operating in England will be able to spend the receipts on a wider range of training for staff. That's good for retailers operating down south, including Scottish headquartered firms like Dobbies Garden Centres and Schuh. Unfortunately, here in Scotland the levy seems set to remain little more than a tax on employment, hampering retailers' investment in skills. Unlike counterparts down south, retailers here are unable to spend any of the £15 million they stump up annually for the levy. Ministers risk fumbling the chance of reform that benefits Scots employers too. A year into their term in office the Labour Government can point to some solid progress but with the key yardstick being economic growth, the jury is still out on whether they can deliver. David Lonsdale is director of the Scottish Retail Consortium.
