The Blubber

The European Union is preparing a list of concessions it may offer to former President Donald Trump’s administration in hopes of securing a partial rollback of U.S. tariffs that have already begun affecting the bloc’s exports — and are expected to rise after April 2.

According to sources familiar with the discussions, EU officials were informed during meetings in Washington this week that there is no way to avoid the new round of auto and so-called reciprocal tariffs set to be implemented next week. At the same time, early talks have begun on what a possible deal to reduce the measures could look like.

In response, the European Commission — which oversees trade policy for the EU — has started drafting a “term sheet” for a potential agreement. The document would outline areas open for negotiation, including reductions in EU duties, joint investment efforts with the U.S., and the potential loosening of specific regulations and standards, according to people familiar with the matter who requested anonymity.

These reciprocal tariffs are designed to counter what Trump views as unfair practices, including not only tariffs on American goods but also non-tariff barriers such as domestic regulations, tax collection systems, and levies like the EU’s value-added tax (VAT), digital services taxes, and product regulations. The EU maintains that its VAT is a neutral, non-discriminatory tax applied equally to imported and domestic goods.

A European Commission spokesperson declined to comment.

Following the news, the euro briefly erased losses, hovering around $1.0794. European bonds gave up some earlier gains, with the yield on 10-year German bunds down three basis points to 2.74%.

Any deal shaped by EU negotiators would still require Trump’s personal approval. The term sheet would serve as a starting point for negotiations once the reciprocal tariffs are in place. Those duties are expected to target a broad range — possibly all — of the EU’s exports to the U.S., the sources said.