The U.S. and European Union are scrambling to strike a last-minute trade deal before a July 9 deadline, when the U.S. is set to slap 50% tariffs on nearly all EU goods — and the EU is preparing billions in countermeasures.

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European Commission President Ursula von der Leyen told EU leaders at a private summit that she’s confident a deal can be reached in time to avoid an all-out trade war, according to sources familiar with the talks. The optimism follows a fresh proposal from the Trump administration this week.

Several EU leaders reportedly signaled they’d be willing to accept some trade imbalances to prevent escalation. Meanwhile, U.S. Commerce Secretary Howard Lutnick confirmed that talks are accelerating and expressed confidence on Bloomberg TV: “I think we can get a deal now.”

Markets reacted positively to the news. The Stoxx Europe 600 Index rose 1%, up from 0.7% earlier in the day, while German bond yields also ticked higher.

The stakes are high. President Trump’s proposed tariffs — part of his push for “reciprocal trade” — would hit 70% of EU exports to the U.S., worth €380 billion ($445 billion). Additional levies already announced include 25% tariffs on cars and 50% duties on steel and aluminum, with more aimed at key sectors like semiconductors, pharmaceuticals, and aircraft.

The EU is negotiating, but also preparing for the worst. It has already approved €21 billion in retaliatory tariffs targeting U.S. goods from politically sensitive states, including soybeans, poultry, and motorcycles. A second wave worth €95 billion is ready to hit U.S. industrial goods like Boeing jets, cars, and bourbon — and EU officials are eyeing further steps beyond tariffs.

Negotiations have focused on major sectors, including metals, autos, pharmaceuticals, semiconductors, and civilian aircraft. While leaders didn’t specify how much imbalance they’d tolerate in a deal, von der Leyen made it clear: the EU is ready to sign — or fight.

“We are ready for a deal,” she told reporters. “At the same time, we are preparing for the possibility that no satisfactory agreement is reached. All options remain on the table.”