Europe finds itself in a tough spot. European Union leaders believe that a baseline 10% rate on the so-called reciprocal tariffs is inevitable in any trade deal between the US and the EU. These are challenging times indeed.

European negotiators continue to push for lowering the tariff below 10%. However, securing a lower rate for the region appears an impossible task. "10% is a sticky issue. We are pressing them but now they are getting revenues," one of the EU officials said.

Talks on reducing tariffs for the EU have stalled after the US began generating revenue from its global duties.

Earlier, it was reported that EU leaders refused to accept 10% as the baseline tariff during negotiations. At the same time, regional authorities acknowledged that it would be difficult to change or abolish that baseline.

Notably, US President Donald Trump imposed a 50% tariff on steel and aluminum and a 25% levy on cars. Against this backdrop, EU leaders are scrambling to strike a deal before July 9, when reciprocal tariffs on most other goods could jump from 10% to 50%. The eurozone’s $236 billion trade surplus with th US recorded in 2024 is adding fuel to the fire. In the current situation, the eurozone stands to suffer more from tariffs than the UK, which runs a trade deficit with the US.

Tensions are rising following recent attacks from the White House against the EU. On June 24, The US leader once again accused the bloc of unfair trade practices.

Washington also strives to include non-tariff barriers in the negotiations, such as digital taxes, sustainability reporting rules, LNG exports, and food standards.