By Philip Blenkinsop and Jan Strupczewski
BRUSSELS (Reuters) - European Union leaders are to tell the European Commission on Thursday if they want a quick trade deal with the United States at the cost of Washington getting better terms, or to escalate the fight in the hope of something better.
A quick deal seems to be the preferred option for most, officials and diplomats said, as the EU can then seek to address the unfavourable bias with some rebalancing measures of its own.
The Commission, which negotiates trade agreements on behalf of the EU, will ask leaders of the EU's 27 members meeting in Brussels how they want to respond to President Donald Trump's July 9 deadline for a deal, now less than two weeks away.
The bloc has said it is striving for a mutually beneficial agreement, but as Washington looks set to stick to its 10% across-the-board tariffs on most EU goods and threatens higher rates with prolonged talks, EU diplomats said a growing number of EU countries were now favouring a quick resolution.
"It is ...in everyone's interest that the trade conflict with the United States does not escalate further," German Chancellor Friedrich Merz said on Tuesday in parliament.
"I know that the European Commission is negotiating with great caution in this regard, and it has our full support. I hope that we will reach a solution with the United States by the beginning of July," Merz said.
The bloc is already facing U.S. import tariffs of 50% on its steel and aluminium, 25% for cars and car parts, along with a 10% tariff on most other EU goods, which Trump has threatened could rise to 50% without an agreement.
The United States' only completed trade deal to date is with Britain, with the broad 10% tariff still in place. U.S. officials say it will not go lower for any trading partner.
Some 23 of the leaders will come to Brussels straight from the NATO summit in the Hague. Few will want to follow the accord there with an economic war.
"There is a group of EU countries that want to protect companies by seemingly accepting something they have gotten used to – a 10% baseline," one EU diplomat said.
REBALANCING MEASURES
One question EU leaders face is whether they should respond with their own measures to such a baseline tariff. "We are also prepared for that with a range of options," Merz said.
The European Union has agreed, but not imposed, tariffs on 21 billion euros of U.S. goods and is debating a further package of tariffs on up to 95 billion euros of U.S. imports. Some EU countries favour watering it down.
"The Commission has rightly said that some member states are nibbling away too much, which would weaken these rebalancing measures," said one EU diplomat.
Among the EU rebalancing options is a tax on digital advertising, which would hit U.S. giants like Alphabet Inc.'s Google, Meta, Apple, X, or Microsoft and eat into the trade surplus in services the U.S. has with the EU. The bloc has a trade surplus with the U.S. in goods.
The Commission has proposed an EU-US deal to cut respective tariffs on industrial goods to zero, along with potential further EU purchases of liquefied natural gas and soybeans.
Washington has shown little obvious interest, preferring to highlight items it considers as barriers, such as EU value-added tax, environmental standards and rules on online platforms, on which the EU does not want to move.
On the sidelines of the summit, EU leaders will also seek to allay the concerns of Slovakia and Hungary over ending their access to Russian gas as foreseen by the EU's plan to phase out all Russian gas imports by the end of 2027.
EU diplomats said EU leaders' assurances over gas should allow the two countries to back the EU's 18th package of sanctions against Russia, which they are now blocking. The sanctions could be adopted by EU governments on Friday.
But the EU might have to drop from the package its proposal to lower the price cap on Russian seaborne oil to $45 per barrel from the current $60, because the measure has failed to win the support of the U.S. and EU countries with big oil shipping industries - Greece, Malta and Cyprus -- are also against it.
(Reporting by Philip Blenkinsop and Jan Strupczewski; additional reporting by Milan Strahm in Brussels and Andreas Rinke in Berlin; Editing by Raju Gopalakrishnan)
