U.S. plays hardball on tariffs deadline as EU battles for a deal

The U.S. has signaled it volition not fto up connected its Aug. 1 deadline for higher tariffs connected the European Union arsenic the bloc fights to onslaught a woody successful time.

Over the weekend, U.S. Commerce Secretary Howard Lutnick said helium was assured a commercialized woody could beryllium struck with the European Union, but warned that the deadline for a baseline 30% tariff is fixed.

"That's a hard deadline, truthful connected August 1, the caller tariff rates volition travel in," Lutnick said Sunday on CBS News erstwhile asked astir the deadline for his EU tariffs.

He did awesome that talks could proceed aft this date, however, noting: "These are the 2 biggest trading partners successful the world, talking to each other. We'll get a woody done. I americium assured we'll get a woody done."

"Nothing stops countries from talking to america aft August 1, but they're going to commencement paying the tariffs connected August 1," he added.

The EU has said it is preparing retaliatory measures against the U.S. if punitive commercialized tariffs are imposed. Lutnick dismissed the anticipation of the EU targeting items similar Boeing airplanes and Kentucky bourbon, however, saying, "they're conscionable not going to bash that."

Last-ditch talks to scope a commercialized statement are ongoing, with the EU hoping it tin negociate a little tariff rate. The bloc had hoped it could onslaught a akin pact to the U.K., which was the archetypal state to marque a commercialized statement with the U.S. That woody includes a 10% baseline tariff with immoderate caveats relating to car, alloy and aerospace imports.

But economists and analysts person go progressively skeptical astir Brussels' quality to hold connected a akin framework.

For one, the EU has a overmuch trickier narration with U.S. President Donald Trump than the U.K. does. Trump has often bemoaned what helium sees arsenic an imbalanced commercialized narration and unfair trading practices, which the EU denies.

According to the European Council, full commercialized betwixt the EU and U.S. amounted to 1.68 trillion euros ($1.96 trillion) successful 2024. While the EU ran a commercialized surplus successful goods, it recorded a shortage successful services. Overall, the bloc had a surplus of astir 50 cardinal euros past year, erstwhile some goods and services are taken into account.

Last Friday, the Financial Times reported that Trump was pushing for a minimum tariff of 15% to 20% connected EU imports successful immoderate woody with the bloc. The president was besides reportedly blessed to support duties connected the car assemblage astatine 25%, a determination that would wounded car exporters successful Germany peculiarly hard.

Speaking to CNBC's "Europe Early Edition" connected Monday, Arnaud Girod, caput of economics and cross-asset strategy astatine Kepler Cheuvreux, said a complaint of 15% to 20% "would beryllium a full car clang for European exports."

"On apical of that, you adhd the euro spot that we've had ... truthful that would commencement to outgo and to beryllium precise achy for European exports, and, of course, would besides potentially, you know, reignite immoderate fears connected the ostentation beforehand successful the U.S.," helium added.

The White House's seemingly harsher stance toward Brussels has prompted policymakers to see however they volition respond to a 30% tariff, which would beryllium a steep hike from the existent 10% work that came into effect successful April.

One EU authoritative told CNBC that determination has been a wide displacement successful temper regarding the bloc's imaginable effect among each EU subordinate states, but Hungary, whose leader, Viktor Orban, is simply a Trump ally.

The bloc's imaginable countermeasures against the U.S. see levies connected imports from the U.S. worthy 21 cardinal euros, which are presently connected intermission until Aug. 6. The European Commission has besides prepared a 2nd circular of imaginable tariffs targeting commercialized worthy 72 cardinal euros.

Imports ranging from covering to cultivation products and nutrient and portion items could beryllium affected.

Meanwhile, the Wall Street Journal and Bloomberg reported that an expanding fig of EU subordinate states person signalled their enactment for the bloc deploying its anti-coercion instrument. This is the EU's astir almighty commercialized tool, which would springiness the European Commission wide powers to instrumentality retaliatory enactment against the U.S.

Kepler Cheuvreux's Girod welcomed the question astir tariff argumentation successful the EU, saying the bloc was "finally" flexing its muscles and that this was needed to scope an agreement.

"They've been very, very, I would say, cool, with the U.S. truthful far, and present that we're approaching the deadline, they person to dependable a spot much aggressive," Girod said. "Not getting a amended woody than the U.K. is ... an contented for the EU, and they person to beryllium that the full operation of the EU is helpful."

— CNBC's Matthew Ward-Perkins contributed to this report.