EU, US Close In on Trade Deal as Tariff Deadline Looms

German Chancellor Friedrich Merz says there’s finally light at the end of the tunnel in the long-running EU-US trade dispute — with negotiators inching toward a compromise that could avert a new wave of painful tariffs.

“We have been hearing in the last few minutes that there could possibly be decisions,” Merz said Wednesday in Berlin, just ahead of a dinner meeting with French President Emmanuel Macron.

The US has been threatening to slap a 30% tariff on European exports if no deal is reached by August 1, escalating tensions that have simmered since new levies kicked in back in April.

But this week, hope emerged: both sides appear to be nearing a deal that would lock in a 15% tariff rate on EU goods — a face-saving compromise modeled on Washington’s recent agreement with Japan.

Macron confirmed the flurry of behind-the-scenes action, saying European leaders and the European Commission have been in “constant contact” to coordinate their position.

“We want the lowest possible tariffs, but also to be respected as the partners that we are,” he said.US Treasury Secretary Scott Bessent also struck a hopeful tone in an interview with Bloomberg TV, saying negotiations were “going better than they had been” and were clearly moving forward.

On Wednesday, EU Trade Commissioner Maros Sefcovic met again with US Commerce Secretary Howard Lutnick, while European Commission officials briefed EU member states after the latest closed-door round.Diplomats say the deal between Washington and Tokyo has turned up the heat on Brussels.

“The Japan agreement made clear the terms of the shakedown,” one EU diplomat bluntly told the Financial Times. “Most member states are holding their noses and could take this deal.”

If finalized, the agreement may carve out exemptions for specific sectors, including aircraft, medical devices, and alcoholic beverages, the newspaper reports.

Still, the European Commission isn’t taking any chances. It’s already prepped a $100 billion retaliatory tariff package — just in case talks fall apart at the last minute.

EU exporters have already been weathering a 10% tariff on US-bound goods since April, piling onto pre-existing duties that have battered several industries.

Whether a deal gets inked in time or not, one thing’s clear: this standoff is more about power and leverage than policy — and both sides know it.

With input from Al Jazeera