EU Readies Tariff Retaliation as US Threatens 30% Import Duties

The European Union is preparing retaliatory tariffs and exploring legal countermeasures in response to US threats of imposing a 30% tariff on EU imports starting Aug. 1. As transatlantic trade talks stall, EU officials warn that such measures from Washington would severely disrupt global supply chains and effectively halt trade between the two economic powers.

US President Donald Trump has escalated pressure on the European Union by demanding that any future trade agreement include minimum tariffs between 15% and 20%, according to sources cited by the Financial Times. Trump’s stance signals a hardline shift that could derail transatlantic trade talks and ignite a new wave of economic retaliation.

Threat of Sweeping Tariffs

Last week, Trump threatened to impose a 30% tariff on all imports from both Mexico and the European Union, effective Aug. 1. This move follows stalled negotiations with multiple US trade partners and could mark the most aggressive protectionist stance yet from the former president, who is seeking to reassert US leverage in global trade, MBN reports.

The proposed 30% tariff, Trump says, would be separate from all existing sectoral tariffs, which include levies of 50% on steel and aluminum and 25% on auto imports. In a series of letters sent to 25 trading partners, including Canada, Japan, Brazil, and the European Union, Trump outlined potential tariffs ranging from 20% to 50%, including a 50% tariff on copper.

In his letter to the European Union, Trump insisted the bloc eliminate its own tariffs on US goods, arguing that the EU should allow “complete, open Market Access” to reduce the transatlantic trade deficit.

Europe Pushes Back

The European Union, alarmed by Trump’s aggressive demands, has warned of serious economic fallout. European Commission President Ursula von der Leyen says that the 30% tariffs “would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers, and patients on both sides of the Atlantic.”

She adds that countermeasures are under consideration: “The European Union will take all necessary steps to safeguard its interests, including proportionate retaliation.” According to EU diplomats, preparations are underway for possible tariffs on US imports worth €21 billion, now paused until Aug. 6, and a second round worth up to €72 billion.

A Fractured EU Approach

While the EU initially pursued a unified negotiation strategy, internal divisions are emerging. Germany is pushing for a swift resolution to protect its export-heavy industrial sector, particularly its automotive industry. In contrast, France is urging caution, warning against a deal that heavily favors US interests.

Last week, European Commission Vice President Maroš Šefčovič warned that a proposed 30% US tariff would make transatlantic trade “almost impossible,” effectively prohibiting it. He emphasized the significant gap in negotiations and confirmed that the European Union is preparing retaliatory tariffs if talks fail. Ahead of a meeting with EU ministers, Sefcovic stressed the need to protect the EU economy and pledged to do everything possible to avoid this “super-negative scenario.”

The bloc is also considering the use of “anti-coercion” instruments that would allow the European Union to target US services and restrict access to public procurement contracts, according to Reuters.

One EU official tells CNBC that the mood across member states has shifted significantly — with Hungary as the sole exception, due to Prime Minister Viktor Orbán’s alignment with Trump.

Dutch Finance Minister Eelco Heinen echoed EU concerns in an interview with Bloomberg: “We need a deal. We need to deescalate. Free trade is in the best interest of both. But Europe cannot sit still. If there is no deal, retaliation is on the table.”

Economic Impact and Risks

According to information from the European Council, the European Union and the United States enjoy the world’s largest bilateral trade relationship, accounting for 43% of global GDP and nearly 30% of global trade in goods and services. In 2024, trade in goods and services between the two reached €1.68 trillion.

A Global Ripple Effect

In a CNBC interview on July 20, US Commerce Secretary Howard Lutnick expressed confidence that a trade deal between the United States and the European Union will be reached, despite tensions and the threat of retaliation from the European Union. He acknowledged that EU negotiators appear downbeat and have discussed potential countermeasures, but added that a deal is achievable. Lutnick emphasized that the United States and the European Union are the world’s largest trading partners and that it is in both parties’ interest to avoid a trade war. 

He confirmed that Aug. 1 is a hard deadline for new US tariffs to take effect, but added that negotiations can continue beyond that date. He highlighted that the world pays a 10% tariff, while China faces a 30% rate, noting that these tariffs are generating significant monthly revenue for the US and helping reduce the deficit. 

He also argued that smaller economies, including many in Latin America, the Caribbean, and Africa, should expect baseline tariffs of 10% unless they grant greater access to US markets. “And then the bigger economies will either open themselves up or they will pay a fair tariff to America for not opening themselves up and treating America unfairly. If you are going to keep your tariff barriers holding us down, then of course it seems fair that you should pay a tariff to do business with the greatest customer on Earth — the American consumer,” he said.