European Observers Set Sights on US-Europe Trade Agreement Amid Shifting Trade Priorities

"We are moving forward. The United States is also determined to get a deal. So far, there has not been a great number of deals. The deadline is pushing both sides closer to a resolution," said Michał Baranowski, undersecretary of state in Poland's Ministry of Economic Development and Technology.

Baranowski was speaking at the German Marshall Fund's Brussels Forum 2025 event on June 11, where he and other panelists discussed the impact that U.S. trade policy shifts are having on Europe.

"I know that President [Donald] Trump is frustrated with the speed. We in Europe would like to get faster to a deal. We have great negotiators, and I really do hope that we get to a deal, recognizing the fact that, right now, Europe has decided to pause our retaliatory measures," while the U.S. has decided to double down on steel and aluminum via increasing the tariff rate to 50% (see 2506030071), according to Baranowski. "So, I think the beginning of July is going to be a very interesting moment."

Baranowski said European leaders and the U.S. seemed to be backing off from their threats of tariff hikes made three weeks ago. Now, "we are talking" and "there is a sense of things moving. And also perhaps the U.S. is also de-escalating when we look at conversations with China and others," he said.

Baranowski also pointed to recent talks held at the Organisation for Economic Co-operation and Development, where U.S. Trade Representative Jamison Greer made an appearance.

At that meeting, Greer issued a June 4 statement that said, "The European Union provided the United States with a credible starting point for discussions on reciprocal trade, and I am pleased that negotiations are advancing quickly. Today’s meeting in Paris, which occurred alongside technical talks by our teams in Washington, was very constructive and indicates a willingness by the EU to work with us to find a concrete way forward to achieve reciprocal trade."

In addition to talking about U.S.-European tariff negotiations, panelists discussed the effects of U.S. trade policy shifts on Europe.

Fellow panelist Tobias Meyer, chief executive officer of DHL Group, noted that changes in U.S. trade policy have caused changes to international trade flows, particularly trade flows along the Trans-Pacific, where there have been not only changes in tariff rates but also customs regulations. However, what's also influencing U.S. trade policy is pushback from American consumers or American business interests, he said.

"I think the Annex II is a living witness list of who has influence in terms of products being exempted and who is able to get their products on that exemption list," Meyer said, referring to the list of goods exempt from reciprocal tariffs.

Meyer indicated that while the U.S.-U.K. trade agreement seems to lack details -- "Some of us were used to trade deals being quite detailed. ... It's hard to imagine that all details are fully thought through, but maybe it's in the middle of the process, I don't know.” -- one lingering question is if and how businesses will invest in their operations when the U.S. presently seems interested in levying duties.

"How do you build your business case? Do you build something in the U.S. purely based on tariffs?" Meyer said, giving an example of a company building a steel plant. That plant would be operational in the 2030-2031 timeframe, but it's unclear what the U.S. tariff rate would be then, he said.

"I think that's a question where some people are not so quite sure what the answer is. And this is why, I think also, investments are not really taking place. I think at the pace that people envision, business doesn't like uncertainty. That's the case in Europe, and that's also the case in the U.S.," Meyer continued.

Tatiana Prazeres, foreign trade secretary for Brazil's Ministry of Development, Industry, Trade and Services, said the recent shift in global trade policy seems to come from viewing trade not as an opportunity creator but as a threat.

"This intersection between trade and national security is more evident than ever. Trade [is] being somehow used as a tool for geopolitical objectives, for strategic concerns -- this is all new," Prazeres said. "So, I think I would underscore this perception of trade being a tool for geopolitical purposes, something that characterizes this new environment that we are entering. We can discuss how far we are: from a liberal order to a job/economic order, we are in transition. But the views on trade policy have changed fundamentally all over the world."

Baranowski also said the global trade paradigm is changing, and it's still unclear how the change will play out.

"We don't know what will come at the end. For the EU, it is certainly a moment of trial and a moment of keeping our unity. ... But because this moment is happening vis-a-vis our closest ally, United States, and because we are, frankly, the most important economic partner for the United States, this feels different," Baranowski said.

While this upheaval has prompted Europe to be more proactive on reforms and deregulation, "trade has never been as political as it is right now. ... Some of you may know that there was a recent presidential election in Poland, and a good chunk of the debate between the candidates was about trade and economics. And I was struck by this, because five years ago, it was not even on the radar screen," Baranowski said.