Negotiations between the European Union and the United States over a contentious bilateral trade agreement ended late Wednesday without a final settlement, as the European Parliament continues to withhold formal ratification amid escalating tensions over US tariff threats and geopolitical instability.

The European Parliament (EP) has yet to grant official approval to the pact. A significant bloc of lawmakers is now demanding the insertion of stringent safeguard clauses, citing the US administration’s unilateral decision to increase certain tariffs in violation of the agreement’s spirit. Concerns have been further exacerbated by threats regarding the annexation of Greenland, which MEPs argue have called the foundations of transatlantic cooperation into question.

US President Donald Trump has issued a high-stakes ultimatum, threatening to raise tariffs on European automotive imports from 15% to 25% if the trade agreement is not implemented immediately.

Internal accounts suggest the framework of the deal was effectively dictated by the United States last summer without substantive negotiations, despite fierce opposition from France. The drive to finalize the pact has been largely spearheaded by the German government under Chancellor Friedrich Merz, whose administration is seeking to protect a domestic automotive industry currently grappling with a severe structural crisis.

The latest round of “trilogue” negotiations—involving the European Parliament, member state governments, and the European Commission—concluded in the early hours of Thursday morning without a breakthrough. While reports from the meeting indicate that the parties narrowed their differences on several technical points, the European Parliament remains firm on its demand for protectionist safeguards, despite intense pressure from Berlin.

Negotiations are scheduled to resume on May 19.

Strategic dependency and the “New Realpolitik”

A report prepared by Sabine Weyand, then the European Commission’s Director-General for Trade, provides a detailed account of the events leading to the preliminary customs agreement reached on July 27, 2025, between Commission President Ursula von der Leyen and President Trump.

Weyand, a veteran negotiator known for her rigorous approach, noted in late August 2025 that the process lacked the hallmarks of a traditional negotiation. “There was no exchange of demands or offers,” Weyand stated, emphasizing that the European side operated under extreme duress.

The report highlights that the EU’s total security dependence on the US, driven by the ongoing war in Ukraine, left Brussels with little leverage. Weyand argued that failing to concede to the Trump administration’s demands—or attempting to implement counter-measures—carried the unacceptable risk of Washington “calling the security partnership into question.”

According to Weyand, the Commission made a strategic calculation to “secure a general political package.” Following the signing of the agreement at President Trump’s Turnberry golf resort in Scotland, Weyand reportedly characterized the lopsided arrangement as “simply the Realpolitik of a new era.”

Alignment against the WTO

The agreement has drawn sharp criticism from economic experts who argue that Brussels has aligned itself with Washington’s efforts to bypass international trade norms. Gabriel Felbermayr, a member of the German Council of Economic Experts, noted that the deal constitutes a clear violation of World Trade Organization (WTO) law.

Under the WTO framework, the US had committed to a 2.5% general tariff on automobile imports. By agreeing to a bilateral deal that circumvents these multilateral obligations, Felbermayr argues the EU has become an “accomplice in an attack on the WTO.”

Furthermore, this alignment appears to have yielded few tangible benefits for the EU. Since the initial signing, the US has progressively expanded steel and aluminum tariffs to cover additional product categories. Felbermayr warned that if the EU fulfills its obligation to reduce industrial tariffs to zero while the US fails to reciprocate, Brussels risks being left in a position of extreme disadvantage.

Dominance of German automotive interests

Ursula von der Leyen’s initial endorsement of the tariff agreement last summer sparked significant internal friction within the bloc. France led the opposition, with Prime Minister François Bayrou denouncing the deal as a “capitulation” to Washington.

French Foreign Trade Minister Laurent Saint-Martin has insisted that “the final word has not yet been spoken,” warning that the EU’s status as a global economic power is at stake. However, these protests were largely sidelined by the German government’s support for von der Leyen.

While the deal is viewed as potentially harmful to other sectors—such as the chemical industry, which faces competition from duty-free US imports—the German automotive sector has lobbied aggressively for its adoption. The US remains the most critical export market for German carmakers.

Industry sources argue that a rapid reduction of US tariffs from 25% back to 15% is an existential priority. Additionally, the sector has a vested interest in avoiding retaliatory tariffs, as German manufacturers frequently import vehicles into the EU from their own production facilities located within the US.

Parliamentary resistance in Brussels

Despite the industrial pressure, the European Parliament has emerged as a major hurdle. Ratification votes have been suspended twice on short notice: first in January following the Greenland annexation threats, and again in February after a US Supreme Court ruling found a majority of the Trump administration’s tariffs to be unlawful.

On March 26, the Parliament finally granted conditional approval, but with strict stipulations. MEPs are demanding that EU tariff waivers on US goods only take effect once Washington has fully complied with all provisions of the agreement.

To date, Washington has continued to raise tariffs on goods with even minimal steel and aluminum content, despite such moves being outside the scope of the pact.

The European Parliament is also seeking a mechanism to suspend the agreement if the US government employs economic pressure to extract political concessions, or if specific US imports flood European markets. Under the Parliament’s proposal, the extensive duty-free access granted to the US would be subject to a formal review by March 31, 2028, with the possibility of immediate revocation if it is found to cause disproportionate harm to EU industries.

Industry pressure on the Chancellery

In the wake of Trump’s latest threat to hike auto tariffs to 25%, the German automotive lobby has intensified its pressure on Brussels. Chancellor Merz has echoed these calls, urging the EU to implement the agreement as demanded by Washington without further delay or conditionality.

Hildegard Müller, President of the German Association of the Automotive Industry (VDA), has demanded the unconditional fulfillment of the July 2025 pact, stating that the EU must “finally implement its part of the agreement.”

Chancellor Merz has criticized the European Parliament’s stance, accusing the European side of “constantly introducing new conditions.” According to the Chancellor, “the Americans are ready; the Europeans are not,” as he continues to push for a resolution at the earliest possible date.