Months of careful negotiations, swift pledges to buy more American goods and even once unthinkable overtures to roll back plans for a tax on Big Tech haven’t spared the European Union from sweeping new US tariffs. But that still hasn’t convinced Brussels that it’s time to rethink its trade negotiation strategy.
In a rapid deterioration of what European diplomats expected to be the final stretch of painstaking talks, US President Donald Trump on Friday sent a bombshell letter to the European Commission announcing plans to impose a 30% baseline tariff on the EU — the US’ largest trading partner — from 1 August. The move reportedly came as a surprise not only to EU officials, but also to US negotiators, who had recently praised their European counterparts for making compelling concessions.
In turn, Commission President Ursula von der Leyen said that the EU would extend the suspension of a first batch of counter-tariffs due to take effect on Tuesday — a response that’s in line with the EU executive’s months-long strategy of seeking de-escalation at all costs. EU trade ministers quickly backed that decision at an informal meeting at the European Council on Monday.
Asked at the Council Monday whether the EU’s reluctance to act on its countermeasures risks eroding its credibility, Danish Foreign Minister Lars Løkke Rasmussen was blunt: “I don’t believe in the idea of escalating to deescalate,” he said.
That echoed Von der Leyen's remarks the day prior. "We have always been very clear that we prefer a negotiated solution. This remains the case, and we will use the time that we have now," she told a press conference on Sunday, adding the EU remained hopeful it could clinch a deal ahead of the 1 August deadline.
Despite the US president’s latest tariff threat, negotiations between the two sides appear to be ongoing. Maroš Šefčovič, the EU's commissioner for trade and economic security, is due to speak with his US counterpart later Monday.
Rather than a stumbling block in negotiations, “the general sense among member states is that [Trump’s surprise U-turn] is a negotiating tactic," one European diplomat, speaking on the condition of anonymity, said of the president's letter.
But even as Brussels resolutely sticks to its ‘keep calm and carry on’ approach, Trump’s existing tariffs are starting to bite. Amid a cycle of threats and reprieves over the past months, the EU currently faces a 10% baseline tariff on all exports to the US — which Trump at one point threatened would rise to 50% — along with a steep 50% levy on European steel and aluminium, and a 25% rate on cars.
“When you reach 30%, you reach a level that’s prohibitive for a lot of trade,” Aslak Berg, a research fellow at the Centre for European Reform, told The Parliament. He argued that, while some transatlantic commercial ties could be maintained, the impact would be so dramatic that the EU wouldn’t see much of a difference between 30% and an even higher levy.
“At that point, you might as well think that you have to retaliate,” he added.
Meanwhile, national leaders appeared frustrated by Trump’s latest menace. French President Emmanuel Macron called for a tougher EU response, while Italian Prime Minister Giorgia Meloni warned against a deepening trade war “within the West” that would “make us all weaker to contend with the global challenges we're facing together.”
If you want trade, prepare for tariffs
Brussels has been clear that, while it would always opt for a deal, if forced, it wouldn’t shy away from painful retaliation.
“We will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required,” Von der Leyen insisted on Sunday.
On top of a first package of countermeasures worth an estimated €21 billion to respond to the steel and aluminium tariffs, the EU has spent months discussing a second retaliatory package that would target the equivalent of €72 billion in US exports, down from the €95 billion initially proposed.
And Šefčovič stressed on Monday that the counter-tariffs don’t “exhaust our toolbox, and every instrument remains on the table.” One of those tools is the bloc’s Anti-Coercion Instrument, a powerful trade defense instrument designed to retaliate against full-fledged economic blackmail on a European country.
To deter retaliation, Trump warned in his missive that “whatever the number you choose to raise them by, will be added onto the 30% that we charge.”
But for Nicolas Frederic Poitiers, a research fellow at the Bruegel economic think tank, Trump’s threats are more bark that bite. He praised Brussels’ decision to hold off on an immediate response to what he sees as an empty threat.
“One way of reading [Trump’s announcement] is to increase the pressure on negotiations, while another way of reading it is to save face," given he again postponed the deadline for a trade deal, Poitiers said.
He added: “I wouldn’t take him seriously.”
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