United States President Donald Trump is holding showdown talks with European Commission President Ursula von der Leyen in an effort to avoid a costly trade war.
Ms von der Leyen travelled to Scotland to meet with the US President at his golf club on Sunday, local time.
Her trip comes after previous discussions between US officials and European Union trade chief Maros Sefcovic failed to produce an agreement.
Mr Sefcovic had flown to Washington DC after President Trump threatened to impose new 30 per cent tariffs on the EU unless the 27-member bloc could reach a trade agreement with the US by August 1.
It is widely expected Ms von der Leyen will agree a deal which will see the EU hit with a baseline 15 per cent tariff on most of its goods.
EU officials are hopeful this would include cars, which are currently being hit with a 27.5 per cent tariff.
Speaking to Reuters on condition of anonymity, a Trump administration official was “cautiously optimistic” about the showdown talks, but warned it would be unwise to pre-empt an outcome.
“It’s not over till it’s over,” the official said.
Should the talks fail, the EU has prepared countermeasures covering €93 billion ($166 billion) worth of US products.
That retaliatory effort would also likely spark fresh chaos on global markets and even prompt further actions from the US.
President Trump had previously embarked on a similar trade war with China, ramping up tariffs to well over 100 per cent before both sides backed down.
In the lead up to his meeting with Ms von der Leyen, the US President said little to suggest his administration would not take a similar course of action with Europe.
While the impact of escalating tariffs on China were felt by many US businesses and consumers, a trade war with the EU would likely be much more severe.
The US and EU are each other’s largest trading partners by far and account for a third of global trade.
Regardless, US officials have remained bullish in their assessment of the trade relationship, with Commerce Secretary Howard Lutnick even going as far as suggesting the EU was in a weak position and was desperate to cut a deal on any terms possible.
“The question is, do they offer President Trump a good enough deal that is worth it for him to step off of the 30 per cent tariffs that he set,” he told Fox News Sunday.
Those comments echoed earlier remarks from President Trump himself, who claimed Europe wanted to “make a deal very badly”.
With Reuters