Trump Shifts Focus to EU After Japan Trade Deal: Tensions Rise Ahead of Tariff Deadline

Just hours after securing a trade framework with Japan, U.S. President Donald Trump has quickly turned his attention to the European Union. With a tariff deadline looming, pressure is mounting on both sides to reach a breakthrough.

From Tokyo to Brussels: Trump's Trade Agenda Gains Speed

Speaking late Tuesday, President Trump hinted at fast-moving developments:

“We have Europe coming in tomorrow, and the next day, we have some other ones coming in,” he said, without elaborating.

The remarks followed the announcement of a U.S.–Japan trade agreement, which included a baseline auto tariff rate of 15%, significantly lower than the previous 25%, and — notably — no export caps.

This has raised hopes that the EU may also reach a favorable deal, especially as automobiles remain one of the top three EU exports to the U.S., according to the European Council.

Countdown to August 1: High Stakes for U.S.–EU Talks

The urgency is clear: A 30% tariff on EU imports to the U.S. is set to take effect on August 1. Brussels has prepared retaliatory measures worth €21 billion, but has held them back in a final push for diplomacy.

An EU Commission spokesperson confirmed that intensive technical and political discussions are underway, with EU Trade Commissioner Maros Sefcovic scheduled to speak with U.S. Commerce Secretary Howard Lutnick.

“The EU’s primary focus is on achieving a negotiated outcome with the U.S.,” the spokesperson said.

So far, the U.S. side appears unwilling to delay the deadline, unlike previous negotiations, adding pressure to finalize terms quickly.

"Japan Effect" Raises Hope in the Markets

According to a Deutsche Bank research note, the U.S.–Japan agreement has raised expectations that the EU might secure a similar deal — especially in the auto sector.

Citi economist Katsuhiko Aiba highlighted a key takeaway:

“It is notable that auto tariffs were reduced without any cap on auto exports for a major auto-exporting country, which may have implications for negotiations with the EU and South Korea.”

Analysts believe the EU may accept a baseline tariff rate if it can negotiate sector-specific exemptions, such as in the automotive, machinery, and agricultural sectors.

Markets responded with optimism: European auto stocks jumped 3.5%, driving the Stoxx 600 index up 1% shortly after Wednesday’s open.

Balancing Between the U.S. and China: A Diplomatic Tightrope

As the EU pushes for a deal with Washington, it is also navigating delicate relations with Beijing.

European Commission President Ursula von der Leyen and European Council President Antonio Costa are visiting Asia this week, meeting with Japanese leaders on Wednesday before the EU–China summit on Thursday, where trade is expected to dominate discussions.

Meanwhile, Vice President Maros Sefcovic noted he had a “significant video call” with Chinese Commerce Minister Wang Wentao, hinting at backchannel diplomacy.

Analysts warn that Trump’s protectionist approach could pressure the EU to take a tougher stance on China, further complicating the bloc’s strategic position between two economic giants.