By Brian Swint and Anita Hamilton

The European Union is currently negotiating a deal in which its products imported into the U.S. are tariffed at a 15% rate. That would be well below the 30% rate President Donald Trump announced earlier this month in a letter to the 27-member bloc.

U.S. trade negotiators appear to be on board with such a deal, which could also include a 15% rate for car imports, The Wall Street Journal reported. President Donald Trump hasn't yet signed off on such a deal, which would put the EU's tariff rate at the same level as Japan's.

U.S.-Japan Trade Pact Could Spark a Flurry of Deals. Canada May Walk Away.

Investors will be hoping for a late flurry of more trade deals ahead of the Aug. 1 deadline for higher tariff rates to come into effect.

Arrangements with Japan, Indonesia, and the Philippines were announced Tuesday and are seen as a good sign, especially as President Donald Trump said just a few weeks ago that he didn't think a deal with Japan would happen.

Up next could be a pact with India. Treasury Secretary Scott Bessent said Tuesday that a "rash of trade deals" will happen in the coming days.

If the EU deal doesn't materialize, the bloc is planning on responding to higher tariffs with a 30% tax on some $100 billion of U.S. goods, Bloomberg reported early Wednesday, citing people familiar with the plans.

Separately, Canadian Prime Minister Mark Carney said Tuesday that his country won't accept a bad deal. Trump currently has goods from Canada slated for 35% tariffs.

Analysts at Goldman Sachs led by Jan Hatzius said that after the deadline, it expects the overall effective tariff rate to be 15% on all goods imports with higher rates for copper and critical minerals. It sees that rate climbing to 17% by 2027 as tariffs go up further, which will fan inflation, keeping it above the Federal Reserve's target for the next three years.

Nevertheless, investors were relieved on Wednesday. Japanese stocks, and especially auto makers, were jumping after a Tokyo trade official said the levy on autos would be dropped to 15% from the current 25%. On his Truth Social media site, Trump said that the deal with Japan is the largest in history, and that it's "a great deal for everybody."

Toyota American depositary receipts jumped 13% after the market opened. Honda, another big Japanese car marker, surged 12%.

Prime Minister Shigeru Ishiba, whose party lost a parliamentary election on Sunday after he took a tough stance in negotiations with the U.S., denied a report that he had decided to step down, according to Reuters.

Hallmarks of the deals so far include promises for other countries to buy American products. They often feature rates that are higher on imports to the U.S. than other countries are charging. Trump is also looking out for the interests of U.S. technology companies, The Wall Street Journal reported.

With just a week before the reprieve on tariff rates ends, the race is on for remaining trade partners to beat the deadline.

Write to Brian Swint at brian.swint@barrons.com and Anita Hamilton at anita.hamilton@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 23, 2025 15:06 ET (19:06 GMT)

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