EU Prepares Retaliation Plan as US Trade Stance Hardens

The EU is preparing a retaliation plan in case of a no-deal scenario with the US. Despite efforts to negotiate a deal, progress has been limited, with the US now seeking a near-universal tariff of 10% on EU goods with few exemptions. EU envoys are set to meet to discuss potential measures, with the goal of keeping negotiations on track ahead of an August 1 deadline. The US has already imposed tariffs on EU exports worth €380 billion, or 70% of the bloc's exports to the US.

The European Union is gearing up to implement retaliatory tariffs against the United States in anticipation of a potential no-deal scenario in their ongoing trade negotiations. Despite ongoing efforts to reach a mutually beneficial agreement, progress has been limited, with the US now proposing a near-universal tariff of 10% on EU goods, with few exemptions [1].

The EU, which is the US's largest trading partner, has been working to maintain a positive trade relationship despite the recent escalation in tariffs. The US has already imposed tariffs on EU exports worth €380 billion, which represents approximately 70% of the bloc's exports to the US [1]. In response, the EU has been preparing a list of retaliatory tariffs that could significantly impact the transatlantic trade relationship.

EU officials have indicated that they are ready to implement these measures if negotiations with the US break down before the August 1 deadline. The EU's trade policy committee is expected to formally approve the list of retaliatory tariffs, which will cover a wide range of US goods, including aircraft and parts, cars, machinery, electrical products, chemicals, and agricultural products [1].

The EU's response to the US tariffs has been met with mixed reactions from member states. While Germany has urged a quick deal to safeguard its industries, other EU members, particularly France, have insisted that EU negotiators must not cave in to an "asymmetric" deal in favor of the US [1].

The potential impact of these tariffs on the economies of both the US and the EU is significant. Economists estimate that a US tariff on EU goods of 35%, along with a 10% retaliation from Brussels, could shave 0.7% from the eurozone's output, lowering it to just 0.4% annual growth [1]. This could derail much of the eurozone's already meagre growth, which has been strained by the COVID-19 pandemic and the surge in energy prices following Russia's invasion of Ukraine.

The US, for its part, could face significant backlash from certain industries, particularly agriculture, which is a top-five market for US exports to Europe. European tariffs could reduce US farm incomes and anger a key Trump constituency. The same is true for the auto and plane parts sectors [1].

Despite the challenges, EU officials remain optimistic about the potential for a negotiated solution. European Commission President Ursula von der Leyen has stated that the EU prefers a negotiated solution and is willing to continue preparing countermeasures to ensure they are fully prepared [2].

References:
[1] https://www.aljazeera.com/economy/2025/7/16/what-retaliatory-action-is-the-eu-planning-over-trumps-tariffs
[2] https://apnews.com/article/eu-trump-tariffs-von-der-leyen-talks-3d01a24fd5cfb38fa7070e556d675498