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(Bloomberg) — Donald Trump's rift with Friedrich Merz is complicating the European Union's push to finish its US trade deal before fresh tariffs arrive.
The US president was reluctant on Thursday to delay his threatened 25% levy on European cars and trucks because he remains angry with the German chancellor over his criticism of the war in Iran, according to a person familiar with the matter.
That's making senior European officials anxious that failing to conclude their trade deal before Trump's new July 4 deadline may trigger a downward spiral, the person added, speaking anonymously to describe private discussions. While officials are expressing confidence they can complete their own work by then, the window also leaves nearly two months for Trump's personal grievances to resurface.
The situation is yet another reminder that for Trump, all policy issues are interwoven and personal. Practically speaking, Trump's anger at Merz has nothing to do with the US-EU trade deal. But in Trump's world, it's all related.
For now, the two sides have reached an uneasy detente. Trump on Thursday backed away from his vow last week to imminently hit Europe with higher auto tariffs after a call with European Commission President Ursula von der Leyen, the bloc's top executive.
"They haven't really kept up their end of the bargain, and that has the president pretty frustrated, but my expectation is by the Fourth of July, that they will," White House National Economic Council Director Kevin Hassett told Bloomberg TV on Friday.
Spokespeople for the White House and commission didn't respond to requests for comment.
The move was typical Trump: Deliver an ultimatum before ultimately shifting his timeline. The new deadline also coincides with the chronology EU negotiators had already envisioned for themselves. Earlier this week, EU trade chief Maros Sefcovic even publicly called on both sides to have the deal implemented by July.
That doesn't mean Europe is out of the woods.
Germany is currently doing damage control with Trump — the country's foreign minister on Thursday insisted that Berlin backs the US goal of guaranteeing Iran can't obtain a nuclear weapon. But Trump hasn't retracted his threat to pull more than 5,000 troops out of Germany, leaving open a sensitive issue that could soon renew hostilities between the two.
A German government spokesperson didn't immediately reply to a request for comment.
On top of that, Europe has its own internal issues to resolve over the actual trade deal, which the US has partially implemented while the EU works through its legislative process.
The European Parliament and EU capitals are still haggling over the agreement's text, as EU lawmakers try to amend the deal von der Leyen initially struck with Trump last July. Parliament wants to add an expiration date and stipulations that the agreement won't go into effect until the US fully honors all its commitments.
"We are sticking to the deal, but we need also guarantees if the other side is not sticking to the deal," said Bernd Lange, the European Parliament trade committee chair who's overseeing the legislative file, in a statement to Bloomberg News.
Indeed, EU lawmakers are not looking to alter the pact's broad contours, which include the EU agreeing to a 15% tariff ceiling on most products in exchange for erasing levies on US industrial goods. The bloc is generally keen to ratify the lopsided arrangement to avoid a full-blown trade war and give European businesses more predictability.
Trump officials this week cautioned Europe against making any substantive tweaks to the original accord.
"That could limit relief, limit the benefit of the agreement, place limits on US exports to Europe," US Trade Representative Jamieson Greer told Bloomberg TV on Wednesday.
Greer, who recently returned from a Group of Seven trade ministers' meeting in Paris, also warned that the US will reinstall pre-deal levies if Europe doesn't move swiftly.
"They have told me they're committed to compliance," he told Fox Business on Friday. "If it's not the case," he added, "the US will go back to its other tariff structure for the EU."
During six hours of negotiations on Wednesday night, the EU failed to harmonize on the major outstanding issues. Still, those involved said officials were making headway.
"I'm sure that we will find a reasonable compromise which is sufficient for the European Parliament," Lange told Bloomberg News the morning after the talks.
Sefcovic largely agreed.
"This significant investment of time and effort suggests that we are making considerable progress and have already achieved a lot — although, of course, nothing is agreed until everything is agreed," he posted Thursday on LinkedIn.
EU negotiators will likely next get together again on May 19. If they can find an agreement at that gathering, Parliament and EU capitals could ratify the deal in June.
Until then, officials just have to hope that Trump's mounting ire at Europe — and Merz — doesn't resurface. In addition to his irritation with Germany, Trump has recently gone after Italy's Giorgia Meloni, an ostensible ally, as well as the pope. He also mused about leaving the NATO military alliance and is still only months removed from demanding he be given Greenland, a Danish territory.
Trump avoided any fresh barbs at Europe on Thursday night after speaking with von der Leyen, but he did frame the issue through a US-focused lens.
"I agreed to give her until our Country's 250th Birthday," he wrote on his Truth Social platform. "Or, unfortunately, their Tariffs would immediately jump to much higher levels."
Fuente: GCAPTAIN_NEWS
