A string of U.S.-led deals with key trading partners could help reduce heightened uncertainty in the business community and financial markets but represent a “suboptimal” solution, says the European Union’s top economic official.

Valdis Dombrovskis said those deals are bound to entrench higher tariffs on goods and services relative to before President Trump returning to the White House this year. The individual deals are an “economically suboptimal outcome, but at least it’s clarity,” said Dombrovskis, the EU’s Commissioner for Economy and Productivity.

On the sidelines of the Group of Seven finance and central bank meeting in Banff, Alberta, Dombrovskis said senior officials are engaged in constructive discussions, on matters such as global imbalances and support for Ukraine, and an agreed-upon communique “is within reach.” However, tensions remain, especially on trade.

“Those are sensitive discussions, because views clearly vary between the U.S. and other G-7 partners—notably on U.S. tariffs and the implications on the economy.”

Dombrovskis is scheduled to meet U.S. Treasury Secretary Scott Bessent on Thursday, before the gathering of senior economic policymakers in the Rocky Mountain resort town concludes. He said he would be “raising those trade points and the importance of making progress in EU-US negotiations.”

In a forecast released this week, the EU downgraded the bloc’s economic outlook, citing the abrupt changes in U.S. trade policy and uncertainty about tariffs. The U.S. and U.K. unveiled a framework trade pact this month that is limited in scope. Under the proposed deal, most U.K. goods will still be subject to the global 10% tariff the U.S. imposed on all countries in April.

Dombrovskis said such arrangements indicate that the other deals the Trump administration reaches with allies will likely entrench higher tariffs, and therefore higher prices for the goods and services that consumers crave.

The “tariffs remain there, and so they are still continuing to exercise a drag on growth,” he said. “Of course, these kinds of agreements, if they are concluded and properly implemented, at least, would reduce uncertainty surrounding this whole tariff situation.”

Dombrovskis said G-7 members did not get into detailed discussions about the existing tariffs. “In a sense, pretty much all of us are now in bilateral discussions and conversations with the U.S. to find a solution.”

He said that when it comes to Ukraine, the G-7 officials had a positive discussion on the need to continue to support the country, and the need to apply pressure on Russia with foreign sanctions.

Source: MSN

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