Trump’s checkmate on Europe’s key industries

European capital markets are in turmoil amid growing uncertainty after reports emerged that no trade agreement has been reached between Brussels and Washington within the planned 90-day deadline. This uncertainty has negatively impacted Europe’s heavy and key industries and, consequently, the stocks and assets tied to these sectors across the continent.

According to informed sources, the European Union and the United States are preparing a trade deal under which the U.S. will impose a baseline 10% tariff on European goods. The preliminary agreement is expected to be finalized soon and legally implemented by August 1st. However, this “one-sided deal” offers little to no benefit for Europe.

Senior officials at the European Economic Commission state that these negotiations are merely a channel for making tariff disputes with Washington more manageable and should not be regarded as a “privilege” or “balanced agreement.” Trump has also emphasized that the talks with the EU must conclude by early August, a deadline he himself has set. Should no deal be signed, additional tariffs will be imposed.

The issue is clear: the U.S. is not willing to eliminate the baseline 10% tariffs on European goods, even in the final agreement. While reducing tariffs from 25% to 10% may seem like good news for European investors, the core crisis — the devaluation of shares tied to Europe’s key industries — remains unresolved. Currently, the U.S. imposes a 25% tariff on European cars, 50% on steel and aluminum, and 10% on other EU imports.

Bilateral talks between Brussels and Washington on lifting car tariffs are ongoing. This issue is critical for Germany’s automotive industry, which heavily relies on trade with the U.S. Germany remains the economic heartbeat of the EU and the Eurozone. Continued car tariffs on German products have already led to the loss of at least 50,000 jobs in this sector.

The main concerns within the Eurozone stem from countries with significant trade surpluses with the U.S. Germany and Italy, alongside Ireland — the EU’s largest exporters to America — remain worried about U.S. proposals to exclude key sectors like automobiles, steel, aluminum, and pharmaceuticals from exemptions. The final deal with the U.S. is unlikely to address these concerns fundamentally; it merely aims to “reduce the intensity of the tariff crisis.”

European market analysts note that while this process might eliminate some of the uncertainty surrounding the “scope of U.S. tariffs on Europe,” it will certainly not dispel the broader and long-term concerns. Moreover, promises from officials like Ursula von der Leyen, President of the European Commission, have so far remained rhetorical threats with no real action.

Retaliatory measures by the EU are still on the table but have yet to be finalized by the Commission. Europe must decide when to implement them. European officials have admitted there is no immediate plan to counter America’s tariff pressure. Investors across Europe are anxiously watching the negotiations leading up to August 1st. Some European sources even suggest that, given Trump’s unpredictable nature, there are no guarantees of success in these trade talks, even if they appear to be progressing.