EU Weighs Tougher Trade Retaliation as U.S. Tariff Threats Mount

Xinhua

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The European Union is considering a broader array of countermeasures against the United States as hopes for a transatlantic trade agreement continue to fade, EU diplomats have confirmed.

According to diplomatic sources, an increasing number of EU member states — including key economic power Germany — are now prepared to explore the use of the bloc’s new anti-coercion instrument (ACI), a legal tool designed to respond to economic pressure from foreign powers. The move comes amid rising frustration over the U.S. administration’s tariff threats and a breakdown in trade talks.

The European Commission had been negotiating a deal that would leave most EU exports subject to a 10% U.S. tariff, with limited concessions. However, prospects for a compromise have dimmed significantly following U.S. President Donald Trump’s recent announcement that a 30% tariff on EU goods could be imposed as early as 1 August. That announcement came after inconclusive talks in Washington between EU Trade Commissioner Maroš Šefčovič and his U.S. counterparts.

Commissioner Šefčovič told EU envoys that U.S. officials had offered conflicting proposals, and that no single negotiator could guarantee what terms would ultimately be acceptable to President Trump. “Each interlocutor seemed to have different ideas. No one can tell [Šefčovič] what would actually fly with Trump,” one diplomat remarked.

Tariff relief on U.S. duties — currently 50% on steel and aluminium and 25% on cars and car parts — appears unlikely. Washington has also rejected the EU’s proposal for a “standstill” clause, which would prevent additional tariffs post-agreement. U.S. officials argue such a clause would restrict presidential discretion on national security matters, which underpin Section 232 trade actions on sectors like pharmaceuticals, semiconductors, and timber.

In light of these developments, EU member states are preparing to act. The bloc already has one package of retaliatory tariffs targeting €21 billion ($24.5 billion) in U.S. goods, currently suspended until 6 August. Discussions are now intensifying around a second wave of countermeasures, potentially targeting an additional €72 billion in U.S. exports.

More significantly, the EU is now more seriously considering activating the ACI — originally developed with China in mind — to counter U.S. economic coercion. If triggered, the ACI could target U.S. service exports, restrict access to the EU’s €2 trillion public procurement market, limit U.S. investment, and curtail protections on intellectual property, chemicals, and food products.

While France has long supported the ACI’s use, other countries have been more hesitant, citing the potential for escalation. President Trump has already warned that the U.S. would retaliate against any such measures. However, support for activating the ACI is growing, with Germany now indicating it should be seriously considered.

European Commission President Ursula von der Leyen recently stated that the ACI was designed for extraordinary situations but added, “We are not there yet.” The Commission would require a qualified majority—15 member states representing 65% of the EU population—to move forward with the instrument. Diplomats say the necessary backing is increasingly within reach.

Article was originally published by Reuters



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