After reprieve, EU still in fix to find trade deal to satisfy Trump

By Philip Blenkinsop

BRUSSELS (Reuters) -The European Union may have won a reprieve from U.S. President Donald Trump's threatened 50% tariffs, but it remains unclear how the bloc will square its push for a mutually beneficial trade deal with Washington's demands for steep concessions.

Trump backed away from imposing the levies on EU imports from June 1 after a call with European Commission President Ursula von der Leyen, restoring a July 9 deadline to allow talks between the U.S. and the 27-nation union to produce a deal.

The European Commission, which oversees trade policy for the EU, said the call had added new impetus to the negotiations, which the two presidents had agreed to fast track.

There was little indication, however, of what, if any, progress Trump and von der Leyen had made towards clearing a path to a negotiated solution to the trade dispute.

The EU is pushing for a mutually beneficial deal that could include both sides moving to zero tariffs on industrial goods, and the EU buying more soybeans, arms and liquefied natural gas as it phases out all Russian gas imports by the end of 2027.

One EU official said the EU could even buy more hormone-free beef, as Britain did in a trade deal it struck with the U.S. earlier this month.

The European Commission said on Monday it would make a forceful case for its "zero-for-zero" tariff offer, including in a call planned on Monday between European Trade Commissioner Maros Sefcovic and U.S. Commerce Secretary Howard Lutnick.

"We believe that's a very attractive starting point for a good negotiation that could lead to benefits on both sides of the Atlantic," a Commission spokesperson said.

The EU also sees possible cooperation on issues such as steel overcapacity, which both sides blame on China, and digital technology such as AI.

The EU wants to see an end to 25% tariffs on steel and cars and for Trump to drop his so-called "reciprocal" tariff, which was provisionally set at 20% for the EU but is being held at 10% during a 90-day pause until July.

GOODS DEFICIT FIXATION

Washington, however, is intent on reducing its goods trade deficit with the EU, which was almost 200 billion euros ($228 billion) last year, though it does have a sizeable, albeit smaller, trade surplus in services.

It has sent Brussels a list of demands, identifying so-called non-tariff barriers it wants addressed, including value-added tax, EU food safety standards and national digital services taxes.

An industry source familiar with the negotiations said Trump wanted a quick deal with a mixture of tangible and symbolic wins, but his administration was asking for concessions far beyond what the EU was willing, or even able, to agree on.

Taxes, for example, are the competence of individual EU member countries, so the Commission cannot simply negotiate them away.

In some areas, Bernd Lange, the chair of the European Parliament's trade committee, who is leading a group of lawmakers to Washington this week, said the U.S. saw trade barriers where none exist.

"It's about our standards, our chemicals regulation and our digital regulation," he said before his trip. "These are not non-tariff barriers. This is not on the table of negotiations."

The EU could look at specific regulations to see if they might be excessive, he said, but it would not simply adopt all U.S. standards, as the White House appeared to be demanding.

The Trump administration has also said it wants manufacturing - particularly for products such as steel, cars, mobile phones and semiconductors - to relocate to the United States. 

Irish agriculture minister Martin Heydon said on Monday the EU was right to push for a mutually beneficial deal, and Trump's frustration that the EU had not "just rolled over" was almost a compliment for the EU position.

"We are one of the most important trading partners for the U.S. So we shouldn't just agree to whatever the demand is from the White House. We should negotiate and explain that mutually beneficial nature of the trade," he said.  

($1 = 0.8786 euros)

(Reporting by Philip Blenkinsop; Additional reporting by Kate Abnett, Jan Strupczewski and Victoria Waldersee; Editing by Joe Bavier)