As EU-U.S. Trade negotiations heat up, more and more hurdles have come to light between the two countries. 

The largest obstacle between the two countries has been the EU’s potential implementation of the carbon border tax. The tax would impact countries that do not adhere to the EU’s climate goals, specifically in the context of carbon emissions. The carbon tax is the latest flashpoint in the battle between the U.S. and the EU over climate agreements, the most notable of which was the U.S. decision to withdraw from the Paris Climate Accord. French President Macron has objected to the decision of a trade deal as a result of U.S. lack of adherence to the climate deal. 

Additionally, the EU has left agricultural products off the table in negotiations. The U.S. was keen on having agricultural products as one of the key components of the deal. The EU has signaled that it may be willing to make compromises on agriculture which may be the olive branch needed to kick start talks over the other contentious issues.

The final issue that has the possibility of derailing the transatlantic negotiations is the U.S.’s threat of tariffs on EU automakers. Repeatedly, the U.S. President has threatened tariffs up to 25% on EU automakers, which has sparked outrage among the EU, and it is fair to say that if these tariffs came to fruition the trade deal would be called off rather quickly. However, unlike the trade war started with China in 2018, with the Chinese being threatened by U.S. tariffs, the EU understands the larger spillover impact such tariffs would have on U.S. automakers. 

The hope is that these new developments do not spark retaliation on behalf of the U.S. Despite these obstacles, officials on both sides are still hopeful that an agreement can be reached. The brunt of the pressure in talks rests on whether the U.S. will follow through on their threats.