As a looming tariff deadline approaches, the European Union is working to finalize a trade arrangement with the United States that would shield some of its key industries from steep duties set to take effect on August 1, Bloomberg News reported Tuesday, citing sources familiar with the talks.
EU officials are close to securing an initial agreement that would exempt commercial aircraft from certain tariffs, a move likely to benefit Airbus (OTCPK:EADSF) (OTCPK:EADSY). The deal could also include exceptions for specific automakers, particularly German firms such as BMW (OTC:BMWKY) (NEOE:BMW:CA) (OTCPK:BAMXF) and Mercedes-Benz (OTCPK:MBGAF) (OTCPK:MBGYY) (NEOE:BENZ:CA), that operate manufacturing plants in the United States.
However, not all European automakers stand to gain. Italy’s Ferrari (NYSE:RACE), which exports its vehicles from Europe without a U.S. production base, may not qualify for the same protections.
The industries granted relief — including spirits, which are also expected to be spared — highlight both the influence of powerful member states and the strategic sectors the EU aims to protect. Airbus (OTCPK:EADSF) (OTCPK:EADSY), with its multinational production footprint and symbolic status in Europe’s industrial landscape, sits at the center of those priorities.
Headquartered in Toulouse, France, Airbus (OTCPK:EADSF) (OTCPK:EADSY) builds aircraft through a web of facilities across Europe and beyond, including in Germany, Canada, China and Alabama. This global presence has allowed it to market aircraft as “locally made” in key regions such as the United States and China, the world’s two largest aviation markets. In contrast, rival Boeing manufactures exclusively in the U.S., limiting its flexibility in the face of global trade barriers.
Protecting Airbus (OTCPK:EADSF) (OTCPK:EADSY) has become a core EU objective, especially as it faces a 10% tariff disadvantage relative to Boeing (NYSE:BA). EU industry commissioner Stephane Sejourne previously emphasized the need to ensure a level playing field, saying the bloc must act to defend its leading sectors from what he described as unfair competition.
Ongoing discussions this week aim to determine whether the United States will offer immediate tariff exemptions for aircraft aircraft components, and spirits. At last month’s Paris Air Show, U.S. Transportation Secretary Sean Duffy signaled support for returning to the principles of a 1979 trade pact that excluded aircraft trade from tariffs. He said such a framework has historically benefited U.S. exports and could ease tensions by removing aviation from the current dispute.
EU officials estimate that current U.S. duties affect approximately €380 billion ($445 billion) in goods, or about 70% of the bloc’s exports to the United States. Economic projections were revised downward in May, with the European Commission slashing its 2025 growth forecast to 1.1% from 1.5% due to escalating trade tensions.
The EU is pushing to secure a preliminary deal before August 1 that would lock in a uniform 10% tariff rate while both sides work on a more comprehensive agreement. Without a deal, nearly all EU exports to the U.S. could face punitive tariffs of up to 50%.