The United States and the European Union are locked in frantic negotiations over a high-level “framework” trade deal aimed at averting sweeping 50% tariffs that President Donald Trump has vowed to impose on all EU exports starting July 9.

The rush to secure a last-minute accord comes as Trump ruled out granting any deadline extensions, signaling a hardline approach similar to what Japan now faces.

The talks, which are taking place in Washington, have intensified as both sides scramble to avoid a transatlantic economic standoff that could severely impact key industries such as automotive, steel, agriculture, and pharmaceuticals. Diplomats say the EU is prepared to accept a 10% blanket tariff on exports to the US as a compromise—provided Washington suspends the harsher duties and offers leeway on sector-specific items like the 25% car tariff that has already hit German manufacturers hard.

High-Level But Shallow: The Shape of the Deal

According to sources close to the negotiations, the framework being discussed would be modeled on recent “agreement in principle” pacts Trump signed with the UK and Vietnam. It would not be a comprehensive trade deal, but rather a political understanding that freezes further tariff escalation while opening room for deeper discussions over several months.

European Commission President Ursula von der Leyen, speaking in Brussels on Thursday, acknowledged the limits of what could be achieved before next week’s deadline.

“Indeed, what we are aiming at is an agreement in principle, because with such a volume, in 90 days, an agreement in detail is impossible… That is also what the UK did.”

Negotiators on the US side include Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and US Trade Representative Jamieson Greer. Greer is expected to continue working through the weekend in a last-ditch effort to finalize the deal. The EU’s delegation is led by Trade Commissioner Maroš Šef?ovi?.

Sources familiar with the meetings say the EU has pushed for a “standstill clause” that would block any new tariffs during an extended negotiation window—something seen as crucial for German carmakers and other sectors vulnerable to the threatened 50% levies.

Trump Not Backing Down from Deadline

The urgency comes against a backdrop of Trump’s “Liberation Day” tariffs imposed on April 2, which targeted more than 60 countries. The move was part of a dramatic reshaping of US trade policy, with Trump declaring the need to “rebalance trade fairness” through hardline measures. Although he granted a 90-day pause for some countries, that reprieve ends Tuesday—and he has made clear there will be no more extensions.

Asked directly whether Japan or the EU would get extra time, Trump said flatly, “No. I’m not thinking about the pause. I’ll write letters to a lot of countries.” Tokyo, which has been unable to reach a deal, is now bracing for the re-imposition of 30–35% tariffs on cars and rice exports. EU negotiators are determined to avoid the same fate.

“This is not about a minutely detailed trade deal,” said German Chancellor Friedrich Merz in Berlin. “It’s about the quick resolution of a tariff dispute.” Merz has reportedly played a key role in persuading von der Leyen and others within the Commission to pivot toward the more flexible UK-style framework.

The “Massive Tome” and the Four-Point Wish List

One EU source revealed that during talks in April, the bloc was handed what they described as a “massive tome” listing US trade grievances country by country—over 30 pages dedicated to the EU alone. In a recent briefing to EU ambassadors, von der Leyen’s chief of staff and the Commission’s trade director outlined four US priorities: tariff policy, economic purchases (like oil and gas), regulation of strategic sectors (such as pharma and semiconductors), and non-trade barriers including tech, food, and car standards—all of which remain red lines for Brussels.

Crucially, the latest US proposal, sent to EU leaders last Wednesday, contained no reciprocal concessions. That has frustrated EU diplomats, but many acknowledge that even a symbolic agreement would be preferable to a tariff shock next week.

A failure to reach a deal would see all EU goods subjected to a 50% blanket tariff—up from the current 10%, which already includes special levies like the 25% car tax and 50% duties on steel and aluminum. Such a move could devastate German auto exports and deepen global economic uncertainty, particularly as similar threats hang over other key US trade partners including Canada, Mexico, and South Korea.

Despite the EU’s resistance to US demands for deeper regulatory alignment in areas such as food safety and car emissions, negotiators hope to carve out enough progress for Trump to claim victory—possibly in time for a symbolic announcement on July 4, Independence Day.

Trump’s aggressive tariff policy has sparked trade tensions not just with the EU but across the globe. While he claims to have struck deals with China and Vietnam, only the UK has so far signed a formal pact. Talks with Canada, India, and South Korea remain in flux.

Yet Trump’s refusal to extend the July 9 deadline is being interpreted as a show of strength—and a signal that even traditional allies won’t be spared without concrete concessions.

What It Could Mean

The US and EU are on the brink of a major tariff escalation that could trigger a full-blown trade conflict if no deal is reached by July 9. With no extension in sight, and talks stretching through the weekend, the next 96 hours may determine the trajectory of transatlantic trade for years to come.

If a framework is secured, it will serve not just as a ceasefire, but as a face-saving mechanism for both sides—especially Trump, who may use it as a patriotic showpiece during Independence Day celebrations. But if negotiations falter, businesses on both sides of the Atlantic could soon find themselves on the frontline of a trade war neither economy can afford.

President Donald Trump is on the verge of achieving one of his most consequential legislative victories yet, after the House of Representatives on Thursday narrowly passed his sweeping tax-and-spending package—dubbed the “One Big, Beautiful Bill”—marking a historic advance for his domestic agenda.

The bill passed by a vote of 218-214, with two Republicans—Reps. Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania—joining every Democrat in voting against it. The narrow approval came after intense, last-minute pressure from Trump and House Speaker Mike Johnson, R-La., who spent days trying to wrangle skeptical GOP lawmakers amid growing concerns over the bill’s deficit implications.

The legislation, which includes trillions of dollars in tax cuts, heightened immigration enforcement spending, and large-scale Medicaid cuts, passed the Senate earlier this week by a single vote—51-50—requiring Vice President JD Vance to break the tie. Republicans hold only slim majorities in both chambers.

A Late-Night Push to Flip Dissenters

The House vote followed a dramatic overnight push to flip a handful of GOP holdouts who had initially blocked a procedural vote on Wednesday night. The impasse delayed floor action for several hours until four of the five Republican defectors ultimately reversed course by 3:30 a.m. ET Thursday, allowing the final vote to proceed later in the day.

According to White House aides, Trump had been personally involved in lobbying members, making calls, and issuing public warnings that failure to pass the bill would be a “betrayal” of the conservative base. The president had long set a July 4 deadline for final passage, tying the bill’s success to national pride and political momentum ahead of the election season.

Sweeping Overhaul and Deep Cuts

The legislation enshrines large tax cuts aimed at both individuals and corporations, expands border security spending, and imposes strict new work requirements on Medicaid eligibility. But it has drawn sharp rebukes from Democrats, who argue it will deepen inequality and leave millions of low-income Americans without access to healthcare and basic support services.

House Minority Leader Hakeem Jeffries, D-N.Y., led the opposition with a marathon eight-hour, 44-minute floor speech that broke the chamber’s record for the longest in history. Jeffries accused Republicans of waging a “chainsaw” campaign against core safety-net programs, warning that the legislation would devastate the most vulnerable Americans.

Deficit Concerns and Political Calculations

The Congressional Budget Office (CBO) projects that the bill will add $3.4 trillion to the federal deficit over the next decade—an alarming figure that has drawn concern even from some fiscal hawks within the Republican Party. The national debt currently sits at over $36 trillion. The White House has dismissed the CBO’s projections, claiming the agency’s analysis was politically motivated.

House Republicans maintain that the package will drive long-term economic growth by reducing what they label as “waste, fraud, and abuse” in entitlement programs and by encouraging work and private investment.

More than 71 million Americans are currently enrolled in Medicaid. The proposed changes could see millions dropped from coverage in the coming years. Republicans argue that the new work requirements and tighter eligibility criteria are aimed at making the system more efficient and sustainable.

Tariffs Looming, Economic Uncertainty Grows

The bill’s passage also comes amid growing global uncertainty about Trump’s economic strategy. The president is set to reintroduce a sweeping series of “reciprocal” tariffs on major trading partners by July 9—a move economists warn could further strain U.S. trade relationships and global supply chains.

Investors and foreign governments are closely watching how Trump’s legislative and trade ambitions will collide in the weeks ahead, especially with major changes to healthcare, tax law, and border policy now poised to be signed into law.

Trump is expected to sign the bill in a major White House ceremony before July 4, positioning it as a centerpiece of his reelection campaign and a defining contrast to what he has called “years of bureaucratic failure in Washington.”

If signed into law, the “One Big, Beautiful Bill” would mark the most comprehensive overhaul of domestic policy in a generation, reshaping the role of government in everything from health care and immigration to taxes and trade.

Nigeria’s fiscal deficit is projected to widen to 4.7% of GDP in 2025, reversing a modest improvement seen in 2024, the International Monetary Fund (IMF) has warned in its latest Article IV report.

The expected deterioration underscores deep-seated vulnerabilities in Nigeria’s public finance structure, still heavily exposed to oil revenue volatility and compounded by growing expenditure pressure.

The IMF’s projection is markedly higher than the 3.9% deficit outlined in Nigeria’s 2025 federal budget, revealing a likely revenue shortfall as global oil prices remain under pressure and domestic production underwhelms.

Already, the Fund estimates that budget assumptions—set around 1.78 million barrels per day at $77 per barrel—are far too optimistic. Instead, IMF staff forecast lower production levels around 1.45 mbpd and a global oil price average of $70 per barrel. This would severely undermine Nigeria’s federally retained earnings and constrain overall budget implementation.

In 2024, Nigeria managed to reduce its fiscal deficit from 4.8% of GDP in 2023 to 4.1%, largely due to exchange-rate-induced gains in oil-related revenue and improved non-oil tax collection. However, those gains are proving unsustainable in 2025, with the country likely to slide back into deeper deficit territory. Notably, interest payments already consume a staggering over 100% of federal revenue, according to the IMF’s debt sustainability analysis, raising fears about future borrowing and debt rollover risks.

Spending, Revenue Mismatch Persists

On the spending side, government wage bills and pension liabilities are projected to grow by double digits, especially following new wage awards and security force recruitment. At the same time, Nigeria’s fuel subsidy removal—hailed as a fiscal reform milestone—is yielding lower-than-expected savings. While the government expected subsidy savings equivalent to 2% of GDP in 2024, the IMF said only N1.1 trillion (around 0.6% of GDP) was realized, mainly due to reintroduced price caps and incomplete market liberalization.

The revenue side shows promise, but progress remains slow. The ongoing tax reform roadmap aims to expand the country’s narrow tax base by introducing measures like e-invoicing, VAT automation, and digital economy taxation. However, implementation has been patchy across Nigeria’s 36 states, many of which still lack the capacity to enforce modern tax collection systems.

According to the IMF, Nigeria’s general government revenue stood at 7.3% of GDP in 2024, far below the sub-Saharan African average of 13–15%. Although the Value Added Tax (VAT) and Company Income Tax (CIT) reforms have begun to improve non-oil revenue mobilization, their impact will only materialize in the medium term, the Fund said.

Structural Pressures, Mounting Debt

Nigeria’s public debt-to-GDP ratio remains moderate at around 46%, but the structure of the debt is becoming increasingly unsustainable. Over 70% of federal government borrowing is now done at double-digit domestic interest rates, with foreign investors still wary of macroeconomic uncertainty and FX volatility.

Efforts to raise funds through Eurobonds or concessional loans have so far been cautious, as authorities seek to avoid piling up expensive foreign currency liabilities. The IMF noted that the government has ruled out new borrowings from the Central Bank of Nigeria (CBN) via the Ways and Means facility, a previous source of deficit monetization that had stoked inflation and weakened the naira.

The Fund also emphasized the need for a flexible macroeconomic framework, calling on authorities to align fiscal and monetary policies, strengthen exchange-rate stability, and ensure better cash management across MDAs.

IMF Recommendations

To bridge the fiscal gap and ensure long-term sustainability, the IMF made several key recommendations:

• Fully liberalize the fuel market to capture the full value of subsidy removal, including implementing an automatic petrol pricing formula;
• Accelerate tax reforms, particularly by unifying VAT administration, expanding excise coverage, and removing inefficient tax exemptions;
• Rationalize capital spending, prioritizing projects with high economic returns while shelving low-impact ones;
• Cap recurrent expenditure growth, especially in non-essential sectors;
• Establish a fiscal anchor, such as a debt service-to-revenue cap, to guide borrowing and expenditure discipline.

The Fund’s warning comes as Nigeria grapples with rising inflation, volatile FX markets, and subdued growth, compounding fiscal stress. Analysts say that unless the government significantly scales up revenue and cuts wasteful spending, the projected deficit could even exceed 5% of GDP in a downside scenario involving further oil shocks or naira depreciation.

The Ministry of Finance is expected to revise its Medium-Term Expenditure Framework (MTEF) by September, possibly adjusting budget assumptions to reflect lower oil revenue. Meanwhile, the 2025 Tax Reform Bills – signed into law last week – are expected to enable additional revenue-generating measures.

The report concludes that while Nigeria has taken bold steps to reform its economy, the road ahead remains fragile. Sustaining reforms in the face of political pushback, revenue shortfalls, and inflationary pressures will be key to stabilizing Nigeria’s fiscal health.