European Commission President Ursula von der Leyen said she will travel to Scotland this weekend to meet with US President Donald Trump, as both sides aim to reach a trade deal before the August 1 deadline when 30% tariffs on the bloc's exports are due to take effect.

After months of negotiations and back-and-forth diplomacy between Brussels and Washington, D.C., the two sides have zeroed in on a deal last week that will see the EU face 15% tariffs on most of its trade. Limited exceptions are expected to apply to aviation, some medical devices and generic drugs, some alcoholic beverages, and a set of specialized manufacturing equipment needed by the US, Bloomberg previously reported.

Steel and aluminum imports would likely benefit from quotas under the arrangement under discussion, but above that threshold, they would face a higher tariff of 50%. Earlier on Friday, Trump said there was a 50-50 chance of reaching a deal with the EU. "I think the European Union has a pretty good chance of making a deal," Trump told reporters on Friday before leaving for a round of golf in Scotland.

Trump announced tariffs on nearly all of the US's trading partners in April, stating his intention to restore domestic manufacturing, finance the extension of massive tax cuts, and stop other countries from taking advantage of the US. He also sought to remove what he called barriers to American companies doing business around the world.

In addition to the universal levy, the US president has imposed a 25% levy on cars and auto parts, and doubled that on steel and aluminum. He has also threatened to impose new duties on pharmaceuticals and semiconductors as early as next month, and recently announced a 50% tariff on copper.

The EU has been seeking quotas and ceilings on future sectoral tariffs that the US has not yet implemented, but it is unclear whether the initial agreement will protect the bloc from potential future levies at this stage.

The deal would also cover non-tariff barriers, cooperation on economic security, and strategic EU purchases in sectors such as energy and artificial intelligence.

The terms of any initial agreement, which is expected to take the form of a short joint statement, would need to be agreed upon by member states, according to sources familiar with the matter. The statement is seen as a stepping stone to more detailed negotiations.

Due to the ongoing uncertainty, the EU has been simultaneously drafting countermeasures in the event of a no-deal scenario, which would see it quickly hit American exports with tariffs of up to 30% on about €100 billion ($117 billion) worth of goods — including Boeing Co. aircraft, U.S.-made cars, and bourbon whiskey — if no deal is reached and Trump carries out his threat to impose such tariffs on most of the bloc's exports after August 1 or in the future. The package also includes some export restrictions on scrap metal.

In a no-deal scenario, the bloc is also prepared to move forward with its anti-coercion instrument, a powerful trade tool that would eventually allow it to target other areas such as market access, services, and restrictions on public contracts, provided a majority of member states support its use. (alg)

Source: Bloomberg