BRUSSELS — The EU is trying its best to get tough after U.S. President Donald Trump upended transatlantic trade negotiations at the weekend by threatening to impose a 30 percent tariff.
Whether it can follow through is another matter.
Speaking after a crisis meeting of EU trade ministers on Monday, Trade Commissioner Maroš Šefčovič insisted that the latest threats have increased the appetite to retaliate among the bloc’s 27 member countries.
“The message was the strongest I’ve witnessed since we started the discussions with the U.S.,” he told reporters.
“It has become very clear across the table that this is a situation where we have to protect the jobs, we have to protect the businesses, we have to protect the economy, and we need to go for these balancing measures.”
Šefčovič said he would have a call with U.S. Commerce Secretary Howard Lutnick later on Monday to update him on his exchanges with the bloc’s trade ministers.
After insisting last week that a preliminary deal with Washington was imminent, the EU was stunned on Saturday when Trump pulled a U-turn and threatened to impose a 30 percent tariff on EU goods should both sides fail to seal a deal by Aug. 1.
“If tariffs of 30 percent come in, I think trade would basically not be possible,” Thomas Byrne, Ireland’s minister for European affairs, told POLITICO in an interview.
The EU is hesitating, however, over how strongly and how quickly to push back.
Any reaction from the bloc, by design, will always be the lowest common denominator — a weakness the Trump administration is acutely aware of and keen to use to its advantage. That’s leading the EU executive to seek alternative avenues, such as engaging more closely with other G7 countries, to fend off the impact of the tariffs.
‘No taboo’ on retaliation
Over the weekend, the EU executive, which coordinates trade on behalf of the EU’s 27 member countries, delayed by two weeks the implementation of a first package of countermeasures targeting €21 billion in U.S. exports. That pause will now expire by Aug. 6.
Not to give the impression it’s only folding to Trump, the European Commission is also keen to show it can fight.
So at the same time, it is about to present its second raft of retaliatory tariffs on €72 billion of U.S. exports for formal endorsement by EU countries. This falls short of the €95 billion initially targeted, following intense horse-trading between capitals to shield sensitive sectors from Trump’s reprisals.
“There’s no taboo on Europe’s ability to respond. The moment you restrict yourself, you prevent a certain number of responses, you’re not in a favorable balance of power,” said French Trade Minister Laurent Saint-Martin.
“And that’s perhaps where we need to change our methods,” he added.
The EU finds itself with its back against the wall, knowing full well that deterrence only works if the opponent knows you are willing to deploy it — something it yet has to prove. In other words: While some governments see retaliation as a tactic of its own, others hope to use it as leverage in the talks with D.C.
“We spent a fair amount of time [today] talking about creating the right leverage for the Commission,” said Poland’s Undersecretary for Economic Development Michal Baranowski, adding that postponing the first package had broad support across EU countries.
“It is precisely the fact that we are putting [the second package] on the table that is an important signal to the other side. Now let’s continue negotiating,” added Dutch Minister for Foreign Trade Hanneke Boerma after the meeting.
Hitting back?
The decision to delay concrete action — while insisting that the bloc could, eventually, maybe, possibly strike back — feels like déjà-vu.
Until just a few weeks ago, the EU had insisted that a 10 percent U.S. baseline tariff was unacceptable.
Once faced with the reality that Washington wouldn’t budge on the 10 percent tariff, Brussels adjusted its tone, instead pushing for sectoral carve-outs while striking a reconciliatory tone on the universal tariff.
But the 30 percent threat — practically “ending” EU-U.S. trade — is forcing the bloc into a concrete debate on its next retaliatory steps. It’s a discussion that already sounds familiar.
That, too, however, has its limits. When it comes to deploying the bloc’s trade bazooka against the U.S., the so-called Anti-Coercion Instrument, capitals remain cautious.
“It’s there, we don’t see it as necessary, we haven’t seen it as necessary and I think the vast majority of member states haven’t seen it as necessary,” said Ireland’s Byrne.
“We’re here on Bastille Day, July 14, so let’s stay on July 14 for the moment,” he added.
Jakob Weizman contributed to this report.
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