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U.S. President Donald Trump recently signed executive orders in the Oval Office, as European officials express expectations for a potential trade agreement with the United States. There are concerns that failing to finalize such a deal could result in severe economic consequences for both Europe and the U.S., particularly with full-scale tariffs looming.
Pascal Donohoe, who serves as the president of the Eurogroup and Ireland’s finance minister, told CNBC on Wednesday, “I believe reaching an agreement is possible, but we have significant work ahead to accomplish that.” He emphasized the importance of using upcoming time wisely to construct a framework that could help avoid harmful actions between the two regions. This statement comes during the International Monetary Fund (IMF) and World Bank spring meetings in Washington.
The ongoing negotiations between the European Union (EU) and the U.S. are marked by tension as both sides aim to prevent the implementation of U.S. tariffs on European goods, which were announced by Trump, along with EU countermeasures. Trump initially initiated a 20% “reciprocal” tariff on EU imports but has temporarily reduced it to 10% for a 90-day negotiation period. Meanwhile, a 25% tariff on foreign cars and certain steel and aluminum imports remains in effect.
The EU has also put a temporary hold on retaliatory measures targeting approximately 21 billion euros ($24.1 billion) worth of U.S. goods to allow for ongoing negotiations, as confirmed by the European Commission.
Despite the ongoing discussions, European officials indicate that no significant compromises have emerged thus far. Relations may have deteriorated further following the EU’s recent decisions to fine major U.S. tech companies, including Apple and Meta, for violations of the bloc’s digital competition regulations.
The EU argues that its trade relations with the U.S. are relatively balanced. According to data from the European Commission, the EU had a goods trade surplus of 155.8 billion euros ($176.7 billion) with the U.S. in 2023 but reported a services deficit of 104 billion euros. Overall, trade in goods and services between the EU and the U.S. totaled 1.6 trillion euros for that year, according to EU statistics.
Among the EU’s exports to the U.S., machinery and vehicles represent the largest share, followed by chemicals and medicinal products.
Spain’s Finance Minister Carlos Cuerpo also expressed concern, stating that a failure to reach a trade agreement could negatively impact both regions. He highlighted that more than 4 billion euros ($5.1 billion) in daily trade is at risk. “We need to engage in honest dialogue across the Atlantic, as we have a lot at stake in reaching a fair and balanced agreement,” Cuerpo noted during an interview with CNBC.
“The figure is quite significant, with 4.5 billion euros traded daily. This treasure is something we must safeguard,” he emphasized. He pointed out the necessity for the EU to approach negotiations with an open hand, advocating for a fair agreement while acknowledging the existing tariffs that are already impacting businesses.
Meanwhile, Eelco Heinen, the finance minister of the Netherlands, criticized the tariffs as harmful taxation on goods that would adversely affect consumers and lead to a slowdown in business investments.
Major headwinds
The IMF has flagged the trade tariffs initiated by President Trump as major obstacles to growth for both the U.S. and the global economy in 2025. In its April 2025 World Economic Outlook, the IMF revised the U.S. growth projection down to 1.8% for 2025, a reduction of 0.9 percentage points from earlier estimates, while the global growth forecast now stands at 2.8%, down 0.5 percentage points.
Additionally, the eurozone is expected to face a slight contraction, with the projected GDP growth hitting only 0.8% in 2025 but improving modestly to 1.2% in 2026. Spain, however, is anticipated to display stronger growth, with the IMF projecting a 2.5% increase this year, fueled by better-than-expected results in 2024 and reconstruction efforts following natural disasters.
The IMF’s forecasts are based on data available as of early April, including the impact of the U.S.’s “reciprocal” tariffs, but they do not account for subsequent developments such as the recent 90-day tariff pause.
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