Trump shifts gears to EU after striking Japan deal

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preCharge News BUSINESS — U.S. President Donald Trump has now set his sights on trade negotiations with the European Union, after announcing a framework agreement with Japan.

Trump Announces New Trade Focus

“We have Europe coming in tomorrow, and the next day, we have some other ones coming in,” Trump said late on Tuesday, without specifying details.

A European Commission spokesperson meanwhile said that EU Trade Commissioner Maros Sefcovic will speak with U.S. Commerce Secretary Howard Lutnick on Wednesday.

“The EU’s primary focus is on achieving a negotiated outcome with the US. Intensive technical and political level contact is ongoing,” the spokesperson said.

Deadline Looms as EU and U.S. Race Against Time

August 1 Tariff Pressure Mounts on Both Sides

Pressure has ramped up on EU and U.S. negotiators to come to an agreement by Aug. 1, with the Trump administration appearing intent on not changing the timeline on tariffs again.

Levies of 30% on U.S.-bound imports from the EU are set to come into effect next month, with countermeasures from Brussels potentially following soon after. The first tranche of retaliatory tariffs from the EU, which already target imports from the U.S. worth 21 billion euros, are currently on hold, while additional recourses are being prepared.

Japan Trade Deal Sparks Optimism for EU Accord

Analysts Expect Positive Spillover Effect

But the U.S.-Japan agreement appears to have spread a positive sentiment among experts.

“The Japan deal has significantly raised hopes that the EU might also be able to reach a trade deal,” Deutsche Bank Research strategists and economists said in a Wednesday note.

Katsuhiko Aiba, an economist at Citi, suggested in a separate note that the finer details of Japan’s agreement with the U.S. could impact negotiations with the EU.

“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,” he pointed out.

Key Sectoral Concessions Likely to Shape Deal

The U.S.-Japan deal includes a baseline tariff rate of 15%, with Reuters reporting that levies on autos will also be cut to this level — down from the 25% currently in place.

Carving out exemptions or lower rates for some key sectors has long been on EU’s trade agreement wish list, with analysts expecting that the bloc could accept a baseline tariff in exchange for such sectoral provisions.

Road vehicles are among the top three exports from the EU to the U.S., according to the European Council.

European Markets React to Trade Hopes

Auto Sector Surges as Talks Continue

The pan-European Stoxx 600 index was trading 1% higher on Wednesday, roughly an hour after markets opened, with autos jumping by around 3.5%.

Broader Geopolitical Stakes at Play

EU-China Tensions Rise Amid U.S. Pressure

While Europe is eagerly awaiting updates on trade negotiations with the U.S., European Commission President Ursula von der Leyen and European Council President Antonio Costa are travelling to Asia. They are set to meet Japanese leaders on Wednesday before the EU-China summit on Thursday, with trade likely at the top of their agenda.

Trump’s protectionist trade policies are exacerbating existing tensions between the EU and China, experts told preCharge News. They noted Beijing’s concerns that the U.S. may pressure the EU to sharpen its stance on China.

Sefcovic on Tuesday said in a post on X that he had “had an important video call” with Chinese Commerce Minister Wang Wentao, without supplying further details.