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EU and U.S. are seeking a trade deal by July 9

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Trump says EU has not yet offered a fair deal

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US sees 10% baseline rate for reciprocal tariffs

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Baseline 10% rate is 'sticky', senior EU official says

By Julia Payne and Jan Strupczewski

BRUSSELS, June 19 (Reuters) - European officials are

increasingly resigned to a 10% rate on "reciprocal" tariffs

being the baseline in any trade deal between the United States

and the European Union, five sources familiar with the

negotiations said.

President Donald Trump has announced wide-ranging tariffs on

trade partners and wants to reduce the U.S. goods trade deficit

with the EU. U.S. Commerce Secretary Howard Lutnick has ruled

out going below a 10% baseline rate for the so-called reciprocal

tariffs that cover most goods the EU exports to the U.S.

EU neg

otiators are still pressing for the rate to be lower than

10%, said the European sources, who spoke on condition of

anonymity because of the sensitivity of the talks.

But one of the sources, an EU official, said negotiating

the level down had become harder since the U.S. started drawing

revenues from its global tariffs.

"10% is a sticky issue. We are pressing them but now they are

getting revenues," said the official.

A second European source said there had been no acceptance

by the EU of 10% as the baseline rate at talks, but acknowledged

that it would be difficult to change or abolish that baseline.

A spokesperson for the European Commission, the EU's

executive body which negotiates trade deals for the 27-nation

bloc, did not respond to a Reuters request for comment. The U.S.

government also did not immediately comment.

The EU has said publicly it will not settle for a

double-digit baseline rate - as did Britain, which agreed a

limited trade deal in May that retains 10% tariffs on British

exports while cutting higher rates for steel and cars.

Trump has hit Europe with a 50% tariff on steel and

aluminium and a 25% levy on cars, and the EU is trying to secure

a deal before July 9, when reciprocal tariffs on most other

goods could rise from 10% to up to 50%.

With an annual trade surplus of $236 billion with the U.S.

in 2024, the EU has more to lose from tariffs than non-EU member

Britain, which runs a trade deficit with the U.S.

Trump, who has said he wants to use tariff revenues to help

finance his sweeping tax-cut and spending bill, said on Tuesday

the EU was not offering a fair deal.

Washington has sought to fold non-tariff barriers, such as

digital services taxes and corporate sustainability reporting

rules, as well as LNG sales and food standards into the talks.

The U.S. posted a $258-billion budget surplus for April, up

23% from a year earlier, and the Treasury Department said net

customs duties in April more than doubled versus the same period

last year.

TARIFF IMPACT

The sweeping tariffs imposed by Trump since early April and

the subsequent pauses on some of them have generated upheaval

for companies worldwide, causing some to withdraw or refrain

from giving financial guidance.

European automakers have been hit hard. Mercedes

pulled its earnings guidance, Stellantis ( STLA ) suspended

its guidance and Volvo Cars withdrew its earnings

forecasts for the next two years.

One European car executive said premium carmakers could

stomach a 10% tariff but that it would be much tougher for a

mass-market producer.

The tariffs targeting steel and aluminium, and cars and car

parts, were applied on grounds of national security, with

investigations into pharmaceuticals, semiconductors, timber and

trucks possibly leading to further increased duties. EU

officials say they are not willing to accept these.

Trump said on Tuesday that pharma tariffs were "coming very

soon".

A pharma industry source said the European Commission was

resisting sector-specific tariffs. The Commission has told the

pharma industry that while it does not want the 10% baseline

reciprocal tariffs, accepting a 10% base tariff may provide

leverage in those negotiations, the source said.

A European beverage industry source said the wine and

spirits sector would rather have a deal at 10% than protracted

negotiations.

Not securing a deal would have a "huge negative impact... on

our market," said Rob van Gils, CEO of Austrian company Hammerer

Aluminium Industries. "It can be 0 it can be 10%. If it's both

ways that's all manageable. It will not kill business."

One EU official said a 10% baseline rate would "not

massively erode competitive positions, especially if others

receive the same treatment."

France Industries, which represents France's biggest

companies such as L'Oreal and Airbus in Brussels, said tariffs

should not be viewed in isolation.

"It's an additional burden on top of rising energy prices,

inflation, regulatory pressure and global overcapacity," said

its head, Alexandre Saubot.

($1 = 0.8672 euros)

(Additional reporting by Philip Blenkinsop in Brussels,

Christina Amann in Berlin, Tassilo Hummel in Paris, Giuseppe

Fonte in Rome, John Irish in Banff; Editing by Richard Lough and

Timothy Heritage)