The European Union is preparing to take significant retaliatory steps against the United States as trade negotiations continue to falter, especially in light of U.S. President Donald Trump's escalating tariff threats. What initially looked like a challenging but possible agreement between the two sides now appears unlikely to materialize before Washington's August 1 deadline — the date by which Trump has said a sweeping 30% tariff could be imposed on most EU exports.
Key Developments:
Trump Threatens 30% Tariff: Talks with EU Trade Commissioner Maroš Šefčovič yielded no concrete progress, and internal U.S. policy proposals varied widely.
EU Considers ‘Nuclear Option’: Member states, including Germany, are now weighing the use of the EU’s powerful Anti-Coercion Instrument (ACI).
Retaliatory Tariffs Looming: Brussels could revive €21 billion in suspended tariffs and add new duties on up to €72 billion worth of U.S. goods.
Broad Measures on the Table: The EU is reviewing restrictions on U.S. services, public tenders, and intellectual property protections.
Trade Talks Breakdown
Šefčovič briefed EU ambassadors last Friday, warning that the current U.S. position is fragmented and unpredictable. Despite previous optimism for a deal that might cap U.S. tariffs at 10%, Trump’s aggressive pivot to a 30% levy “would practically prohibit transatlantic trade,” Šefčovič reportedly told envoys.
Diplomats noted confusion in Washington, with different U.S. officials proposing divergent solutions — none of which appeared viable under Trump’s protectionist stance.
Meanwhile, longstanding U.S. tariffs of 50% on EU steel and aluminum, and 25% on automobiles and car parts, remain in effect. Hopes of easing these duties have dwindled further.
EU Retaliation Framework Strengthens
The European Commission, responsible for trade negotiations on behalf of the 27-nation bloc, has long emphasized negotiation as the preferred path. However, with little movement from Washington, the EU is recalibrating.
A €21 billion package of retaliatory tariffs on U.S. goods remains suspended until August 6, but could be swiftly reactivated. In addition, officials are discussing a second wave of countermeasures covering €72 billion in U.S. exports.
Anti-Coercion Tool Gains Momentum
Central to the EU’s evolving strategy is the Anti-Coercion Instrument (ACI) — a sweeping legal mechanism that enables the EU to retaliate against countries using economic threats or pressure. Originally conceived in response to Chinese tactics, the ACI would allow the EU to:
Restrict U.S. access to lucrative EU public procurement markets (worth approx. €2 trillion/year)
Limit U.S. service sector activity, where the U.S. currently enjoys a surplus
Block or delay investments, tech transfers, and access to financial services
Curtail intellectual property protections and regulatory approvals (e.g., chemicals and food)
France has been a vocal proponent of invoking the ACI, while other nations — until recently — were hesitant due to concerns it may trigger a trade war. However, sentiment is shifting fast. Germany, a crucial player in EU policy-making, is now reportedly in favor of exploring the option.
European Commission President Ursula von der Leyen recently said, “The ACI was designed for extraordinary situations. We are not there yet — but we may be approaching it.”
To activate the ACI, the EU must secure a qualified majority: 15 of the 27 member countries, representing at least 65% of the population. According to insiders, support for the move is growing.
What’s Next?
While the EU remains open to negotiation, leaders are becoming increasingly resigned to the likelihood of escalating trade tensions. Trump has warned of retaliatory measures if other countries act against U.S. interests — setting up a potential transatlantic showdown with significant global economic consequences.
The coming weeks will be pivotal as Brussels assesses the cost of inaction versus the risks of confrontation. If no compromise emerges, the EU appears poised to strike back — and hard.
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