EU offers U.S. sweeping tariff-free trade deal amid rising tensions

Department of Research, Studies and International News 04-08-2025

In a bid to avert an escalating trade conflict, the European Union extended an offer to the United States proposing the elimination of tariffs on vehicles and a wide array of industrial products, an initiative that preceded the Trump administration’s recent imposition of aggressive trade duties.

Maros Šefčovič, the EU Commissioner for Trade, revealed that this comprehensive “zero-for-zero” proposal was presented to U.S. Commerce Secretary Howard Lutnick during a February 19 meeting. The plan included eliminating tariffs on automobiles, pharmaceutical goods, machinery, and rubber products.

Despite this proactive move by Brussels, U.S. President Donald Trump has shown little interest in the EU’s offer. Speaking at a press conference, Trump dismissed the proposal outright, citing long-standing grievances with European trade practices. “The EU has treated us unfairly for years,” he said. “They’ll need to start purchasing energy from us, and we can easily make up for trade deficits.”

Šefčovič emphasized the EU’s willingness to continue talks but cautioned that its patience is not limitless. “Negotiation is our preferred path, but we will not wait forever,” he stated, referencing planned retaliatory measures as part of the bloc’s contingency strategy.

European Commission President Ursula von der Leyen echoed these sentiments, reaffirming that the EU’s zero-tariff proposal remained open but warning that the bloc is prepared to respond decisively to any economic aggression.

Internal EU documents indicate that member states are considering counter-tariffs targeting up to €26 billion worth of iconic U.S. exports, such as Harley-Davidson motorcycles, orange juice, and denim products. These duties are expected to take effect on April 15.

However, tensions within the EU itself have surfaced, particularly concerning the inclusion of U.S. bourbon whiskey in the retaliation list. France and Ireland have lobbied to exempt bourbon from tariffs, particularly after Trump threatened steep duties on French wines and champagnes. Stéphane Séjourné, a European Commission vice-president, hinted that removing bourbon could mitigate broader economic fallout.

Germany, however, has taken a harder line. Economy Minister Robert Habeck warned against selective exemptions, stating that they would dilute the EU’s negotiating power. “Now is the time for clarity and strength. The U.S. is not negotiating from a position of power,” Habeck declared.

Meanwhile, Italian officials appear to favor diplomacy over confrontation. Italy’s Deputy Prime Minister Antonio Tajani proposed delaying the implementation of EU countermeasures until April 30 to allow more time for dialogue. Prime Minister Giorgia Meloni has also expressed a willingness to negotiate directly with Washington and is reportedly planning a mid-April visit to the U.S.

Despite this, Šefčovič has made it clear that the EU cannot postpone the April 15 deadline due to procedural constraints, though he noted that the scale of the retaliation might be smaller than originally intended. “We are not engaging in a tit-for-tat battle. We will act only as necessary and with the hope of restoring a balanced trade relationship,” he said.

The broader strategic debate continues within the EU on whether to target American technology companies in future retaliation. France has proposed suspending EU investment in the U.S. and emphasized that all sectors, goods and services, should be on the table. Laurent Saint-Martin, France’s trade representative, advocated for an uncompromising stance, referencing the EU’s recently passed anti-coercion legislation, which could be deployed in extreme scenarios.

Ireland has pushed back against these aggressive suggestions. Foreign Minister Simon Harris called targeting tech firms an “unwise escalation,” urging instead for a de-escalation strategy to protect vulnerable sectors such as Irish pharmaceuticals and dairy.

In the coming days, Irish officials will be among the first in the EU to hold direct discussions with U.S. leaders. Ireland’s agriculture and trade ministers are scheduled to meet their American counterparts in Washington to advocate for a peaceful resolution.

The EU’s never-before-invoked anti-coercion law allows for sweeping measures against foreign powers seen as weaponizing trade. These include suspending IP rights, withdrawing business licenses, and banning companies from EU public procurement contracts.

Amid global economic uncertainty, Šefčovič warned of a major shift in international trade dynamics. As EU trade and economy ministers gathered in Luxembourg, stock markets continued to reel from the fallout of Trump’s tariffs, which affect over €380 billion in EU exports.

Outgoing German Economy Minister Habeck criticized the rationale behind the U.S. tariffs and mocked Tesla CEO Elon Musk’s call for free trade as self-serving. “If Musk is so concerned, he should urge his own government to reverse these misguided policies,” Habeck said.

As EU leaders prepare for further talks and strategic decisions, one thing remains clear: the bloc is determined to protect its economic interests, even if it means entering uncharted diplomatic territory.