Investing.com - European and U.S. officials are approaching trade negotiations from two "quite different" vantage points, according to analysts at Goldman Sachs.
The European Union and the U.S. began discussions in February, shortly after U.S. President Donald Trump’s administration announced new tariffs on steel and aluminum.
But in a note to clients, the analysts led by Sven Jari Stehn and Filippo Taddei said the talks between the EU and the U.S. have made "little progress", with both sides at odds over the size of U.S. tariffs.
"[F]or the U.S. the tariff levels are a starting point that requires the EU to offer substantial concessions to prevent additional tariffs, while for EU officials they are an upper bound to be reduced to avoid retaliation," the analysts said.
But there is still time for both parties to bridge this gap before the end of Trump’s 90-day pause to elevated "reciprocal" tariffs in July, they added.
At a much-anticipated event in early April, Trump announced sweeping reciprocal duties on most countries, including a 20% levy on the EU. Trump later moved to delay the tariffs, arguing that it was necessary to give White House negotiators more time to forge dozens of trade agreements with individual nations.
So far, Trump has announced a deal with Britain, while the U.S. and China said they would postpone and lower their respective tariffs for a 90-day period ending in August.
The fate of the EU’s tariffs, however, remain uncertain. Against this backdrop, Brussels has published a list of billions of euros’ worth of U.S. imports that will be hit if the 20% tariff snaps back into effect in July.
Meanwhile, a blanket 10% tariff and the levies on steel, aluminum and other items like autos are also still in effect.
With the clock ticking towards this deadline, the Goldman analysts said they expect the trade spat between the U.S. and EU to result in an extension of the pause, "possibly with some small concessions" from either side.
But the analysts then expect the U.S. to impose new broad sectoral tariff on critical goods, sparking a "moderate" retaliation from the EU that will aim to "prevent a further response" from Washington.
"We view this equilibrium as unstable," the analysts said.