EU deliberates on retaliation strategy following receipt of Trump's correspondence regarding customs issues - EU deliberates countermeasures in response to Trump's correspondence regarding customs issues
The ongoing trade dispute between the European Union (EU) and the United States (US) remains a source of tension, with both parties engaging in diplomatic negotiations to ease the conflict while preparing for potential countermeasures.
**Key Developments**
The escalation of the trade dispute began with US President Donald Trump announcing a 30% tariff on all EU goods, effective from August 1, 2025. This follows previous tariffs, including a 20% tariff implemented in April 2025 and sector-specific tariffs on steel, aluminum, and cars.
In response, the EU has suspended retaliatory tariffs on US goods multiple times to allow for continued trade talks. The latest suspension extends through July 2025, reflecting the EU’s preference for resolving disputes diplomatically rather than through immediate punitive actions.
**Diverging Approaches Among EU Member States**
Member states show differing approaches to the trade dispute. Germany and Italy, with strong trade ties to the US, favour a flexible and non-escalatory approach to avoid further harm to their economies. Conversely, France advocates for a firmer stance to demonstrate strength in negotiations. French President Emmanuel Macron supports the European Commission's strategy and stresses advancing towards a mutually acceptable agreement before the August 1 tariff deadline. He also calls for preparing credible countermeasures should talks fail.
**Negotiation Progress and Challenges**
A preliminary agreement on easing the tariff dispute appears near, with some compromises such as a baseline 10% tariff on EU goods entering the US, exemptions for certain sectors like aircraft and spirits, and ongoing negotiations on other strategic sectors. However, EU diplomats caution that if the agreement does not improve the EU’s position, it may lead to increased tariffs and further trade tensions.
**Potential Countermeasures**
The EU is prepared to use instruments such as the Anti-Coercion Instrument (ACI) to retaliate against US tariffs. The ACI could restrict access to public procurement and other trade or investment areas to pressure the US.
**Looking Ahead**
The EU meeting in Brussels on Monday will focus on discussing a response to this tariff announcement, as well as addressing ongoing difficulties in trade relations with China. The threat of 30% US tariffs starting August 1 looms, prompting EU member states to negotiate both a unified approach and contingency measures, with France pushing for strength, Germany and Italy favouring caution, and EU institutions calling for swift counteractions if talks collapse.
- The European Commission is emphasizing employment policy within the EC countries, with a focus on crafting a robust employment policy to cope with potential economic impacts resulting from the ongoing trade dispute with the US, given the possibility of increased tariffs and further trade tensions.
- As the EU prepares for potential countermeasures against US tariffs, there is growing concern in policy-and-legislation and general-news circles about the implications of war-and-conflicts arising from this trade dispute, raising the importance of careful negotiations to ensure a peaceful resolution.
