Institutions: US-EU Trade Talks Approach Critical Phase, Possible Further Delay if No Agreement Reached

According to ChainCatcher, Natixis has stated that if the European Union and the United States fail to reach an agreement by August 1, the EU will implement the first round of retaliatory measures. In addition, the European Commission is also preparing a second set of countermeasures.

Previously, in the staff's latest macroeconomic forecast for the eurozone, the "severe scenario" assumes that the US will impose a general 20% tariff on all goods, which would be met with reciprocal retaliation from the EU. This scenario is expected to reduce the eurozone's annual GDP growth rate by 0.4 percentage points in both 2025 and 2026 compared to the baseline scenario. If the US raises tariffs on EU goods to 30% and the EU responds in kind, the GDP loss for the eurozone would be even more significant, with growth expected to be about 0.5 percentage points lower than the baseline in 2025 and about 0.6 percentage points lower in 2026.

However, Natixis still believes that although the likelihood is low, there remains a chance that negotiations could be successfully concluded before August 1. Otherwise, under pressure from Europe—especially from the markets and US businesses—the "deadline" may be postponed again.