EU, U.S. Struggle to Finalize Tariff Deal as Fears Over Chinese Goods Rise

The United States and the European Union are still far from reaching a deal to prevent new tariffs, EU Economic Commissioner Valdis Dombrovskis said during the IMF meetings in Washington. The U.S. imposed 25% tariffs on EU cars, steel, and aluminum in March, followed by 20% tariffs on other goods in April, later cutting the second tariff in half and giving a 90-day window to negotiate a broader agreement.

In response, the EU suspended tariffs on some U.S. products and proposed zero tariffs on all industrial goods, but Dombrovskis noted the U.S. showed only moderate interest. A key sticking point remains the U.S. view of Europe’s value-added tax (VAT) as a trade barrier, a claim the EU firmly rejects. Dombrovskis stressed that VAT, similar to U.S. state sales taxes, is essential for EU budgets and should not be part of trade talks.

Meanwhile, Dombrovskis raised concerns about the risk of Chinese goods flooding EU markets after the U.S. imposed sweeping 145% tariffs on Chinese imports. During meetings with Chinese officials, he urged China to avoid redirecting excess exports to Europe. While Chinese counterparts acknowledged the concern, they did not commit to specific actions. Dombrovskis warned that the EU would take countermeasures to protect its companies and jobs if market disruptions occur, emphasizing that escalation would harm the global economy — an outcome neither the EU nor China desires.