EU leaders fear a tariff disaster as Trump’s 10% demand threatens vital trade links.

Brussels is grappling with an economic nightmare as EU leaders quietly concede that a 10% baseline tariff on goods shipped to the United States may be unavoidable. According to five sources close to the negotiations, Europe is increasingly resigned to accepting the hefty tariff rate demanded by Donald Trump, despite months of pressing for a lower figure.

The latest talks, conducted behind closed doors and under a veil of confidentiality, have laid bare a grim reality: the EU has little room to manoeuvre. Trump announced sweeping tariffs across all trade partners in an effort to shrink the US goods deficit, and this hardline stance appears to be gaining traction. The president has promised to use the resulting revenue to fund an ambitious tax-cut and spending programme.

The EU, for its part, has refused to accept double-digit tariffs publicly, echoing the United Kingdom’s resistance in its own negotiations. Yet, one senior EU official admitted privately that challenging the 10% rate has become increasingly “difficult” as the US reaps the benefits of its global tariff regime. “Ten per cent is a sticky issue. We are pressing them, but now they are making money from it,” the official confessed.

Although EU negotiators continue to seek concessions before the looming deadline of 9 July — when existing reciprocal tariffs could spike from 10% to as much as 50% — the mood is tense. The stakes for the EU are higher than for any other trading partner. In 2024, Europe amassed a $236 billion trade surplus with the United States. That figure dwarfs the situation in the UK, which operates a trade deficit with the US and recently settled for a 10% rate on its own exports.

Trump has refused to yield, claiming that the EU has failed to offer a fair deal. Meanwhile, US Treasury Secretary Scott Bessent revealed in a podcast interview that Trump’s hardline approach has already forced EU leaders to the table. “The doubling of tariffs has spurred a greater willingness to negotiate,” Bessent said.

The American side aims to expand the scope of negotiations beyond traditional trade. Washington has proposed bringing digital services taxes, corporate sustainability rules, LNG sales, and food standards into the discussions — making an agreement even harder for the EU.

With the deadline approaching, tensions have risen sharply within the European camp. A second EU source confirmed that despite resistance, accepting the 10% baseline may be inevitable. “There has been no formal acceptance, but we acknowledge how challenging it will be to move away from it,” the source said.

The EU’s trade surplus and its status as one of America’s largest trading partners have left it exposed. Meanwhile, the US has watched its tariff revenues rise sharply. In April, Washington announced a $258 billion budget surplus — up 23% from the prior year — and revealed that net customs duties more than doubled over the same period.

As the clock ticks down to 9 July, the EU finds itself cornered, grappling with a bitter reality. Its leaders must decide whether to accept Trump’s 10% tariff baseline and preserve access to the lucrative US market — or reject it, risking an unprecedented trade crisis. Whatever the outcome, one thing is certain: Europe is on the precipice of a trade war it can ill afford to lose.