EU Extends Tariff Moratorium Amid US Threats, Seeks Alliances

The European Union is actively seeking to strengthen its alliances with key economic partners in response to the recent threats of new tariffs from the United States. This move comes as a reaction to President Donald Trump’s warning of imposing additional duties on EU products. EU insiders have revealed plans to initiate discussions with major partners, including Canada and Japan, to coordinate their responses effectively.

In a significant development, Commission President Ursula von der Leyen announced the extension of the moratorium on reciprocal duties until August 1. This extension provides negotiators with additional time to work towards a resolution. The planned retaliation against Trump’s steel and aluminum tariffs, which was set to reactivate at midnight, has been postponed. Von der Leyen emphasized that while the EU is prepared to take further countermeasures, it still hopes for a negotiated solution.

The EU has prepared an expanded tariff package targeting approximately $96 billion in U.S. goods. The existing list imposes duties on roughly €21 billion ($24.5 billion) of U.S. goods, with a broader package including export controls covering about €72 billion ready for approval by member capitals as soon as Monday. Von der Leyen clarified that the bloc’s ‘anti-coercion instrument,’ designed for crisis response, remains inactivated, stating, “The ACI is created for extraordinary situations. We are not there yet.”

President Emmanuel Macron responded to the threat by urging EU leaders to accelerate the development of a robust response, potentially invoking the ACI should no agreement be reached by August 1. In Berlin, Chancellor Friedrich Merz warned that a 30% surcharge would deal a severe blow to exporters across Europe if no compromise materializes, saying the duties would be “to the core.” He added, “That requires two things: unity in the European Union and good lines of communication with the American president.”

The president dispatched correspondence to multiple trade allies, modifying the previously suggested tariff rates from April and inviting renewed dialogue. One letter, published on Saturday, warned the EU of a looming 30% levy starting next month if superior terms are not reached. Brussels is trying to avoid steeper tariffs from the US, but the letter tempered those hopes. Nations like Mexico were similarly blindsided by comparable notifications.

Insiders indicate that the bloc’s goal is to cap farm-product duties at 10% or below. Ideas for an investment-for-relief scheme, where U.S. capital infusion would translate into lower tariffs for automakers, have been set aside over fears of incentivizing offshoring. Negotiators have shifted focus to securing reduced duties on vehicles, with bilateral talks expected to resume later this week.

Washington has proposed a blanket 10% surcharge on EU output, sparing mainly aerospace and medical-device sectors. In response, Brussels is insisting on relief for wine and spirits and advocating quota limits to soften the existing 50% metals levies. U.S. negotiators, in turn, have suggested a 17% tariff on agricultural products. Any provisional deal would additionally cover regulatory barriers, economic-security cooperation, and strategic procurement. Aside from the upcoming across-the-board tariffs, Trump has imposed 25% duties on vehicles and parts and escalated metals tariffs to 50%.

He further plans sector-based charges on pharmaceuticals, semiconductors, and most recently, copper. Officials warn that, even under a broad agreement, separate guarantees would be required to shield the EU from these targeted measures. The EU’s strategy to expand talks with partners like Canada and Japan is a proactive measure to mitigate the impact of potential U.S. tariffs and to ensure a unified front in negotiations. This approach aims to leverage the collective economic power of these allies to negotiate more favorable terms with the U.S. and to protect key industries from the adverse effects of tariffs.