EU-US Trade Talks Intensify Amid 30% Tariff Threat

European Union and US negotiators are intensifying their efforts to secure a trade deal by August 1, as US President Donald Trump has threatened to impose a 30% tariff on most EU exports. Officials in Brussels are prepared to accept an unbalanced agreement that favors the US if necessary to avoid the deadline. However, despite an earlier round of negotiations in Washington, a decisive breakthrough has yet to be achieved.

The EU is also ramping up preparations to retaliate in case no agreement is reached. EU envoys are set to meet this week to formulate a response plan to a potential no-deal scenario. The US is pushing for a near-universal tariff on EU goods higher than 10%, with limited exemptions for aviation, some medical devices, generic medicines, specific spirits, and manufacturing equipment.

The two sides have discussed potential ceilings for some sectors, quotas for steel and aluminum, and measures to protect supply chains from oversupply. However, even if an agreement is reached, it would need Trump’s approval, whose position remains unclear. US Commerce Secretary Howard Lutnick expressed confidence in securing a deal, stating that it is better for countries to open their markets to the US than to face significant tariffs.

Trump previously warned the EU of a 30% tariff on most of its exports from August 1, alongside existing levies on cars, auto parts, steel, and aluminum. The EU had hoped for an initial framework with a universal rate of 10% on many of its exports before Trump’s letter. The EU is seeking wider exemptions and protection from future sectoral tariffs, while acknowledging that any agreement would be asymmetrical in favor of the US.

Any agreement would address non-tariff barriers, economic security cooperation, digital trade consultations, and strategic purchases. With the deadline approaching and the prospects of a positive outcome diminishing, the EU is preparing to move quickly if a deal cannot be reached. Retaliatory measures would likely need political sign-off from the bloc’s leaders due to the high stakes involved.

Countermeasures could provoke a wider transatlantic trade rift, given Trump’s warnings of tougher tactics in response to retaliation. The EU has already approved potential tariffs on €21 billion of US goods and prepared a list of tariffs on an additional €72 billion of American products. The bloc is also considering measures beyond tariffs, such as export controls and restrictions on public procurement contracts.

A growing number of EU member states want to activate the anti-coercion instrument (ACI) against the US if no acceptable agreement is reached. The ACI would give officials broad powers to take retaliatory action, including new taxes on US tech giants, targeted curbs on US investments, limiting access to the EU market, or restricting US firms from bidding for public contracts in Europe. The ACI was designed as a deterrent and a response to coercive actions from third countries using trade measures to pressure the EU’s policy choices.