Last summer, Brussels inked a trade deal with Washington that most experts viewed as deeply asymmetric, committing Brussels to billions in investments and long-term energy imports running counter to the bloc’s own climate targets.
But even a raw deal, European officials insisted at the time, was preferable to risking a wider trade war crippling European businesses and depriving Ukraine of desperately needed United States security guarantees. It was, as negotiators bluntly put it, “as good as it gets.”
Now, a ruling by the U.S. Supreme Court curtailing Washington’s ability to impose tariffs under the International Emergency Economic Powers Act (IEEPA) is casting doubt on the deal’s future.
In a long-awaited judgment over the weekend, the court challenged the legality of the “reciprocal” tariffs anchoring U.S. President Donald Trump’s economic agenda, punctuating a deal-making spree aimed at plugging the country’s fiscal gap and reshoring manufacturing jobs. In response, Washington promptly raised a new global tariff of 10% as it scrambled to replace dozens of duties imposed over the past year. Trump has since announced plans to further raise it to 15%.
“There is massive uncertainty behind the validity of each and every one of the deals that were struck,” said David Kleimann, a trade analyst with S-Curve Economics, a London-based think tank, referencing dozens of trade accords clinched by Trump under the threat of punishing duties. “The major cornerstone of Trump's foreign economic policy is in complete disarray.”
The IEEPA — long the most potent weapon in Washington’s trade arsenal — had allowed the Trump administration to threaten swift tariffs and bully trading partners into reshaping economic relationships deemed unfavorable to the U.S. With that authority now off the table, the White House has pivoted to Section 122 of the U.S. Trade Act, a far narrower tool that permits only temporary duties of up to 15% in response to "large and serious" balance-of-payments deficits. Trade experts, however, doubt they will survive a July vote in Congress required to extend them beyond their 150-day limit, and expect fresh legal challenges to follow.
But for Trump, Section 122 appears to be less a solution than a stopgap. The administration is likely to launch new investigations under Sections 301 and 232 — citing unfair trade practices and national security concerns — in an effort to preserve elevated tariffs.
Across the Atlantic, the Supreme Court’s ruling introduces a new layer of uncertainty, from questions on whether the new global tariff violates July’s Turnberry agreement to broader concerns about how Washington intends to sustain its tariff regime within tighter legal constraints.
One thing is certain: “It brought no relief,” said an EU diplomat, noting that European countries never expected the legal backstop to bring a tangible relief to the bloc’s ailing businesses. “We were told long before that, even in the event of a negative opinion, they [the Americans] would slap new tariffs immediately — which they have done,” the diplomat said.
What the tariff ruling means for Europe
At first blush, there appears to be little immediate impact on the U.S.’s largest trading partner. Under the controversial Turnberry deal, Brussels had already agreed to a 15% duty on most of its exports to the U.S. market.
However, unlike countries like Brazil, South Africa and China — for whom the new 15% surcharge amounts to an unexpected reprieve from far steeper duties — the EU could end up worse off as new global tariffs would be stacked on top of existing ones. Some sensitive exports could be hit particularly hard, with European cheese facing duties as high as 30%.
Brussels hasn’t downplayed its frustration. “A deal is a deal,” the European Commission said in a statement. “As the United States’ largest trading partner, the EU expects the U.S. to honor the commitments set out in the joint statement — just as the EU stands by its own.”
The Commission requested “full clarity,” stressing that the current situation is “not conducive to delivering fair, balanced and mutually beneficial transatlantic trade and investment.”
To Kleimann, the trade analyst, this is an opportunity for the EU to clinch a better deal than the one signed last summer.
“The US administration is very much on the defensive, struggling to find a patchwork of tariffs that can replace the regime that they had envisaged,” he said. Last summer, the EU was strong-armed into a $750-billion purchase commitment of American energy products over the rest of Trump’s term — effectively swapping Europe’s Russian energy dependence for an American one.
“The terms of the Turnberry deal cannot stand because the U.S. situation has changed so dramatically,” Kleimann said.
But Ignacio García Bercero, a non-resident fellow at economic think tank Bruegel and a former Commission official, ruled out any return to negotiations until Washington clarified its position.
“For the time being I would simply not negotiate,” said the former trade department director. “You cannot negotiate until you know that the other party respects the agreement.”
An transalantic trade deal on life support
With transatlantic relations reaching new lows, the European Parliament had already stalled ratification of an agreement many lawmakers saw as politically untenable — particularly amid threats to Greenland’s territorial integrity. Earlier this week, Parliament formally postponed the vote that had been scheduled for Tuesday.
“The situation is now more uncertain than ever. This runs counter to the stability and predictability we sought to achieve with the Turnberry Deal,” said Bernd Lange, the Parliament’s chief trade negotiator and the chair of the international trade committee.
Most analysts lauded the decision to halt the adoption, calling it the only credible response to the potential breach created by Trump’s new global tariff. “We need to put on hold the adoption of the regulation while there continues to be an issue of breach,” insisted García Bercero, the former Commission official.
But the European Commission seems to have a different strategy in mind. Speaking at a trade committee meeting on Tuesday, trade Commissioner Maroš Šefčovič, argued that a “vote in Plenary in March must remain our target, under the condition, of course, that we get more clarity from the U.S.”
Yet it remains unclear whether that approach is even legally sound. According to Charlie Vest, an associate director at Rhodium Group, ratifying the deal would amount to “agreeing to a deal the U.S. no longer has the legal authority to enforce.”
In the meantime, analysts said European officials should prepare for the worst by reactivating trade defense tools that were shelved after the trade pact was struck.
The 27-nation bloc had readied a €93 billion retaliatory package targeting goods from Republican-led states to respond to Trump’s tariff threats last year.
In addition, the EU has a far more potent retaliation, the so-called Anti-Coercion Instrument (ACI) — better known as the EU’s trade “bazooka.” Adopted two years ago to deter economic blackmail by third countries, the mechanism is meant to hit where it hurts, restricting imports or exports of goods and services, or limiting foreign companies' access to European public procurement tenders. It can also be used to curb foreign direct investment and intellectual property rights.
“If the U.S. were to hit us with extra tariffs,” García Bercero said, “then there should be willingness to retaliate.”
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