Dream on!

A big, beautiful EU trade deal with Trump? Dream on!

European politicians have no appetite to give the White House big concessions and revisit the inflammatory topics that dominated the TTIP talks a decade ago.

By Camille Gijs

Don't expect Europe and the United States to strike a far-reaching trade deal just because U.S. President Donald Trump is threatening to impose tariffs of as much as 50 percent on EU goods by July 9.

Europe has no political appetite to revisit the nightmare of its last attempt to forge a sweeping EU-U.S. trade pact — the Transatlantic Trade and Investment Partnership. Hailed back in 2013 as an attempt to forge a Western trade bloc against China, the TTIP talks buckled three years later as European politicians found it an impossible sell.

Little has changed.

A rushed deal to satisfy America's core trade interests nearly a decade later would prove equally traumatic and toxic. France and Germany know their electorates have not tempered their hostility to chemically rinsed chicken and still fear U.S. corporates would use international arbitration clauses to undermine EU health and environmental standards.

So how can a full-blown trade war be averted by July 9? At most, a cosmetic mini-truce could be in the offing to give Trump a symbolic political win.

Trump is already celebrating that his tariff threat has forced the EU to stop "slow walking" and make a deal. While this mini deal may identify some low-hanging fruit, it is many miles from the vaulting ambition of TTIP, which envisioned regulatory alignment across the Atlantic.

Diplomats and officials say two separate tracks are now in play. EU trade chief Maroš Šefčovič and U.S. Commerce Secretary Howard Lutnick will seek to cool tensions over metals, cars, pharmaceuticals and other sectors targeted by Washington’s trade investigations. A separate, more technical track will negotiate the baseline tariff, which is currently at 10 percent although Trump is threatening to lift it to 50 percent.

This isn't exactly new. Brussels has already offered to drop its (relatively low) tariffs on industrial goods and to team up on tackling the glut in Chinese exports.

To sweeten the deal, other potential tidbits include recognizing U.S. safety standards on cars and dropping duties on American ethanol, although both face political headwinds in the EU.

But it's all a far cry from discussing major agricultural concessions, the alignment of standards, or how multinationals can sue European governments — topics that proved fatal 10 years ago. In 2025, Paris and Berlin are being very clear on the limits of what can be agreed.

No TTIP redux

Germany’s new Chancellor Friedrich Merz, a convinced transatlanticist on a mission to save his country’s ailing car industry, has toned down his campaign claims that sealing a TTIP 2.0 “in the medium term” was a good idea.

“Today we know how valuable that could have been,” Merz said in early May after a call with Trump. “Sadly, that’s spilt milk.” 

French Finance Minister Éric Lombard dared to revive the ghost of TTIP — only to be put back in his box a day later by the office of French President Emmanuel Macron. The French don't want their restive farmers covering the Champs-Élysées with straw and manure.

Jean-Luc Demarty, head of the European Commission’s trade department during the TTIP negotiations, also shivered at the idea of a return to that kind of wide-ranging diplomacy. “That would be a very serious mistake. It would get us nowhere ... I led them for [several years] and I've seen that it was an impossible negotiation,” he told POLITICO. 

An added disincentive to making concessions to Trump is that he has shown he will happily tear up any deal that he strikes — as the Mexicans and Canadians have discovered. Even if a tariff-free TTIP structure had been in place, Trump would presumably have pushed for more.

“Being part of a free-trade agreement is no guarantee that you will not be subject to these tariffs. Even if TTIP existed, I don't know that that would certainly have prevented what's happening right now,” said Josh Lipsky, senior director at the Washington-based Atlantic Council think tank.

Fraying trust

Since taking office Jan. 20, Trump has antagonized the EU more than ever — slamming the bloc as “nastier” than China and insisting it was created to “screw” the United States. 

Brussels has meanwhile been frustrated as its appeals for universal tariff disarmament have fallen on deaf ears.

Its negotiating partner in Washington is also highly erratic.

“This is a different Trump administration: Under TTIP and under what happened straight afterward, there were still very experienced people on the U.S. side, even if one didn't like what [former U.S. Trade Representative] Robert Lighthizer said. He was still a very experienced trade negotiator,” said David Henig of the European Centre for International Political Economy. 

Today, “they don't know what they're looking for, but it doesn't seem like what they are looking for is likely to be any kind of an orthodox deal,” he added. 

So, in a bid to salvage what’s left of the €1.6 trillion transatlantic trade relationship, the EU is placing its bet on modest progress. If TTIP wasn't possible when negotiators were more or less pulling in the same direction 10 years ago, it's even less viable now.

“TTIP was already very hard to do at the time when we were actually negotiating it, even if at that point both sides shared common objectives,” said Ignacio García Bercero, who was then the EU’s chief negotiator for the deal. 

“It became very clear that it was going to become extremely hard to find a way to reach an agreement that the European Union would have been able to present as being balanced. And that was in totally different circumstances than the ones that we are having today,” he said.

Doomed deal

Puffed by its proponents as the biggest bilateral trade agreement ever, TTIP initially seemed straightforward, such were the huge potential economic benefits for both sides. Then-trade commissioner Karel De Gucht said it would put up to an additional €545 in the pockets of European families every year. 

But a political backlash over the secrecy of the talks as well as worries over environmental, health and labor standards eventually doomed the agreement. 

An obscure arbitration scheme, known as the investor-to-state dispute settlement mechanism, heightened tensions because it was seen as giving disproportionate power to multinationals in challenging European rules. 

“It was a mistake. We should never have negotiated about that issue with the United States,” García Bercero said. 

Bad deal then. Bad deal now.

Trump had originally set an impossible June 1 deadline to do a deal before 50 percent tariffs kicked in. After a “very nice call” with von der Leyen, however, the two sides pushed the deadline to July 9. 

But the EU’s own red lines, such as respect for global trade rules, suggest a bona fide deal won't be in reach. 

“If you are the EU and you wish to guard all your regulatory space, you wish to guard your agricultural sector, but you also wish to [get rid of the] 10 percent tariffs, or his tariffs on steel or anything … You've got big demands there if you're the EU,” said Henig from the European Centre for International Political Economy.

An agreement recognizing U.S. standards on car safety — something that also sank the TTIP talks — could help bring more American cars to the EU, although it’s a long shot and has been under fire from safety groups. 

Brussels could also take a page from the U.K.’s agreement with Trump and allow U.S. ethanol into the EU duty-free, but the European industry is already warning of adverse consequences. 

“A similar deal with the EU would mean the same threat for the industry in Europe, where farmers are subject to stricter regulations and without [genetically modified] crops,” said a spokesperson for ePURE, the European renewable ethanol association. 

All in all, even if the EU is determined to make some kind of deal work this time around to appease Trump, the mood is one of pervasive fatalism that the U.S. will not prove an honest broker.

“It was a bad deal the first time around. They rolled over us and they would do it again,” an EU diplomat said.