The European Union prepared on Friday for a formal notification from US President Donald Trump outlining new tariffs against the bloc, raising tensions in transatlantic trade relations. The move follows Trump’s recent expansion of his tariff campaign, targeting allies such as Japan, South Korea, and Canada.

Hopes of a wide-ranging EU-US trade deal covering industrial goods have diminished after months of complex negotiations. What had initially been envisioned as a comprehensive agreement with zero tariffs now appears likely to be reduced to a limited interim arrangement. EU officials still hold out hope for a more favourable long-term outcome.

Internal divisions within the 27-member bloc have complicated negotiations. Germany, whose industrial sector could be severely affected, has pushed for a rapid agreement. In contrast, France and others have cautioned against accepting what they see as a US-dictated deal.

“We would need a crystal ball to detect what the US intentions are,” said one EU diplomat, reflecting the uncertainty surrounding Trump’s next steps.

Another source familiar with the talks said an agreement was within reach, but the prospect of an unexpected letter from Trump announcing additional tariffs remained a possibility.

In the US, Trump has already signalled sweeping tariff hikes: a 50% duty on copper and a rise to 35% on Canadian imports. These moves have rattled US allies and added volatility to financial markets.

European shares slipped on Friday as investors awaited clarity. Jochen Stanzl, chief market analyst at CMC Markets, said optimism over a deal had lifted Germany’s DAX earlier in the week. Still, the sudden tariff hikes against Canada cast doubt over whether the US would offer a fair settlement to Europe.

The global trade outlook remained tense beyond Europe. In Kuala Lumpur, US Secretary of State Marco Rubio met with China’s Foreign Minister Wang Yi as Washington and Beijing pursued competing economic agendas in Asia. Rubio described the meeting as “constructive” but acknowledged unresolved issues.

China, meanwhile, has warned the US against re-imposing tariffs on Chinese goods next month and threatened retaliation against countries that collaborate with Washington to restructure supply chains at Beijing’s expense.