Trade negotiations ongoing, as Trump issues fresh tariff warning to EU economies
The US and the European Union (EU) are engaged in high-stakes trade negotiations, with both sides facing mounting pressure to secure agreements after promises of a flurry of deals. The latest developments in the US-EU trade talks have been marked by escalating tariff threats and potential retaliatory countermeasures, raising significant concerns about a trade war between the two economic powerhouses.
The US has threatened to impose substantial tariffs on goods imported from the EU. As of August 1, 2025, nearly all goods could be subjected to a 30% tariff, an increase from the previous rates. Additionally, some goods currently under a 25% "fentanyl" tariff are set to face a hike to 35% as early as July 10, 2025. The US is also finalizing tariff procedures, particularly regarding aluminum and steel derivative products, with new measures implemented recently and public comments ongoing.
In response, the EU has compiled a list of potential countermeasures amounting to approximately €72 billion ($84 billion), targeting a wide range of US exports. These include aircraft, automotive parts, machinery, chemicals, and agricultural products like bourbon whiskey. The EU's response follows an earlier proposal covering €95 billion worth of US imports for possible additional duties, as well as €21 billion in countermeasures responding to US steel and aluminum tariffs scheduled to take effect on August 6.
Despite the high stakes and rapidly approaching deadlines, no definitive agreement has yet been reached. The EU is preparing its measures if negotiation efforts fail by August 1, 2025. The desired outcome remains a negotiated settlement to roll back tariffs to more moderate levels (around 10-15%) to prevent a full-blown trade conflict that could severely disrupt bilateral trade.
The EU's approach has been to aim for a deal rather than a tit-for-tat trade war, given the EU’s export-oriented economy. However, French President Emmanuel Macron has urged the EU Commission to defend European interests resolutely, while Denmark's foreign minister Lars Løkke Rasmussen states that Brussels needs to show its strength but does not want to escalate the situation.
Negotiations are being led by EU trade chief Maros Sefcovic on behalf of the EU's 27 states. Sefcovic feels Washington is ready to continue negotiating, and he plans to speak with US counterparts later in the day, despite Trump's latest threat. European Commission chief Ursula von der Leyen has delayed a package of retaliatory measures over US tariffs on steel and aluminium, showing a willingness to find a solution.
German Chancellor Friedrich Merz has agreed to engage intensively to find a solution and has spoken with Macron, Trump, and von der Leyen. The US leader has announced plans to impose sweeping tariffs on the EU if no agreement is reached by August 1st, a move that could cause turbulence in financial markets and raise fears of a global economic downturn.
As the deadline approaches, both sides are working towards a resolution. The US has so far only unveiled two pacts, with Britain and Vietnam, alongside temporarily lower tit-for-tat duties with China. The EU, on the other hand, is seeking a unified stance in negotiations with Washington, with each nation having varying levels of exports to the US.
In a bid to prepare for all outcomes, the EU is also preparing an additional package of reprisal measures, which will be presented to trade ministers on Monday. Thomas Byrne, Ireland's minister for industry, has called for Europe to work hard to secure a deal before August 1st to protect investments and jobs. France's trade minister Laurent Saint-Martin suggests retaliation plans should be drawn up with "no taboos".
As the trade talks continue, both sides are under pressure to find a compromise to avoid a damaging trade war. The stakes are high, and a resolution is needed to prevent significant disruptions to bilateral trade and potential economic risks for both the US and the EU.
- The EU is preparing reprisal measures, worth approximately €72 billion ($84 billion), targeted at a variety of US exports such as aircraft, automotive parts, machinery, chemicals, and bourbon whiskey, in response to potential tariffs imposed by the US.
- As the deadline for the US-EU trade negotiations approaches, both sides are under pressure to find a compromise in policy-and-legislation related to jobs and general-news, to avoid a damaging trade war that could severely disrupt bilateral trade and potentially cause economic risks for both the US and the EU.
