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EU prioritises negotiated solution by August 1 deadline

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South Korea seeks in-principle trade deal with US by

deadline

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Investors largely shrug off Trump's tariff tactics

By Philip Blenkinsop and Hyunjoo Jin

BRUSSELS/SEOUL, July 14 (Reuters) - The European Union

and South Korea said on Monday they were working on trade deals

with U.S. President Donald Trump that would soften the blow from

looming tariffs as Washington threatens to impose hefty duties

from August 1.

Trump stepped up his trade war on Saturday, saying he would

impose a 30% tariff on most imports from the EU and Mexico from

next month, adding to similar warnings for other countries

including Asian economic powerhouses Japan and South Korea.

White House Economic Adviser Kevin Hassett said on

Sunday that countries' trade deal offers so far have not

satisfied Trump and "the tariffs are real" without improvements

to their proposals.

"The president thinks that deals need to be better,"

Hassett told ABC's This Week program. "And to basically put a

line in the sand, he sent these letters out to folks, and we'll

see how it works out."

European Trade Commissioner Maros Sefcovic expressed

optimism that Washington and the EU were approaching a positive

outcome for both sides. He warned, however, that a 30% tariff

would practically eliminate trade between the U.S. and the

27-nation bloc, which are currently each other's largest trading

partners.

"We continue to engage with the U.S. administration and

prioritise a negotiated solution by the new deadline of August

1. I cannot imagine walking away without any effort," Sefcovic

said ahead a meeting with EU trade ministers in Brussels.

German Chancellor Friedrich Merz, meanwhile, issued a stark

warning on Sunday regarding the impact of a tariff at that level

on the EU's largest economy.

"If that were to happen, we would have to postpone large

parts of our economic policy efforts, because it would interfere

with everything and hit the German export industry to the core,"

Merz said.

The EU has so far held off on retaliatory measures to

avoid a spiralling tit-for-tat escalation in the trade war while

there remains a chance of negotiating an improved outcome.

But Italy's Foreign Minister Antonio Tajani said the EU has

already prepared a list of tariffs worth 21 billion euros ($24.5

billion) on U.S. goods if the two sides fail to reach a trade

deal.

MARKETS' MUTED REACTION

Since returning to the White House earlier this year, Trump

has sought to use an array of tariffs to boost the U.S. economy,

push companies to invest in the United States, and revitalise

sectors including manufacturing.

His initial "Liberation Day" tariff announcement in April,

which set a baseline tariff of 10% on all imports and higher

duties on certain products or countries, raised fears of global

supply chain disruptions, sending shockwaves through markets.

But subsequent U-turns and delays, including a 90-day pause

on most duties aimed at allowing time for trade deal

negotiations, have left investors largely inured to Trump's

chaotic policy roll-outs.

Stocks eased moderately on Monday, while the dollar gained

little on the euro.

The impact on European spirits companies, many of which rely

heavily on the U.S. market, was also mixed.

Shares in Diageo ( DEO ), whose U.S. business is driven by

sales of Canadian whisky and Mexican tequila, rose 1% in early

European trade. Rival Pernod Ricard, maker of Jameson Irish

whiskey, saw its shares fall 1%, while cognac maker Remy

Cointreau dropped 2.4%

SCRAMBLE FOR DEALS

The looming August 1 deadline has set off a scramble by

governments around the world to seal trade agreements.

South Korea's top trade envoy said on Monday it may be

possible to strike an "in-principle" deal by the deadline and

signalled that Seoul may be open to allowing the U.S. greater

access to its agriculture markets, local media reported.

Minister for Trade Yeo Han-koo, who held high-level talks

with U.S. officials last week, said South Korea was seeking to

avoid "unfair" U.S. tariffs on sectors key to its industrial

prowess that would undermine industrial cooperation with its

main security ally and trading partner, media reports said.

"I believe it's possible to reach an agreement in principle

in the U.S. tariff negotiations, and then take some time to

negotiate further," the Newsis news agency quoted Yeo as telling

local media reporters.

"Twenty days are not enough to come up with a perfect treaty

that contains every detail," he added.

South Korea is in a race to reach a compromise trade pact in

the hope of avoiding a 25% tariff slapped on its exports, the

same level faced by Japan.

(Additional reporting by Milan Strahm, Cristina Carlevaro,

David Lawder, John Revill, Andreas Rinke, Wayne Cole and Emma

Rumney

Writing by Keith Weir

Editing by Joe Bavier)