EU Readies 20% Tariffs on US Goods as Germany, France Push Retaliation Over Trump's 30% Deadline

Germany and France are intensifying pressure on the European Union to prepare retaliatory tariffs against the United States, escalating a transatlantic trade dispute that has seen recent diplomatic shifts. The Financial Times reported that both nations are urging the EU to act unless the U.S. abandons a new round of trade penalties by August 1. This push follows stalled negotiations with the Trump administration and a reversal in Germany’s stance, which had previously advocated for patience and direct dialogue [1].

The EU’s strategy hinges on two potential pathways: activating the anti-coercion instrument (ACI), a first-time policy tool that could ban U.S. firms from EU public contracts, revoke intellectual property protections, and freeze trade in specific sectors, or imposing traditional tariffs on billions of dollars of U.S. goods. While Germany and France back the ACI, internal divisions persist. A diplomat noted, “There is a silent majority against triggering the ACI,” with concerns over its “nuclear” potential given the fluidity of the situation [2]. However, recent developments—particularly a Trump letter warning of 30% reciprocal tariffs by August 1—have hardened EU resolve. One diplomat described Germany’s shift as a “180-degree turn in a few days,” emphasizing a growing consensus that the EU must avoid appearing “without leverage” [3].

A two-stage tariff plan targeting $100 billion in U.S. goods is already in motion. On August 6, the EU will impose 20% tariffs on €21 billion worth of American imports, including chicken and jeans. A second round, potentially hitting €72 billion in goods like Boeing aircraft and bourbon, is set for a vote the same day and could activate immediately thereafter. A third, unannounced list is under development, targeting U.S. services such as digital platforms, which could include taxes on online advertising revenue—a direct challenge to major tech firms [4].

The U.S. response has been firm. Treasury Secretary Scott Bessent reiterated that August 1 is a “hard deadline” for resolving the dispute, warning that unresolved tariffs would “boomerang back to the reciprocal level” [5]. Trump’s rejection of a proposed framework deal further strained relations; the U.S. insists on raising the current 10% tariff to a permanent 15% or higher, while the EU sought exemptions from proposed levies on cars, steel, and aluminum, which were denied [6].

Despite the looming threats, formal retaliation has not yet materialized. The European Commission remains focused on negotiations, with spokesperson Olof Gill stating that “our laser focus is on negotiations and that will be our priority for the moment” [7]. However, the EU’s readiness to escalate is clear. Diplomats describe the ACI as a “calibrated response”—a tool that could range from a “sniper rifle” to a “bazooka” depending on member-state consensus [8].

The outcome now hinges on whether the U.S. retreats before August 1. If not, the EU’s multi-pronged strategy—combining legal, economic, and sector-specific measures—could reshape transatlantic trade dynamics. For now, the bloc’s message is unequivocal: it will not tolerate perceived coercion without a proportional response.

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