EU escalates pressure as Trump trade deal nears
The EU’s 27 nations have let the European Commission focus on securing a trade deal to avoid steep US tariffs
As the EU‑US trade negotiations take shape, the European Union is flexing its muscles to extract concessions from US President Donald Trump before his August 1 deadline.
Brussels and Washington seem to be inching toward a deal with a baseline 15‑percent US levy on EU goods, and possible exemptions for critical sectors, according to multiple diplomats told AFP.
EU states push a retaliation package
EU member states backed a retaliation package of 93 billion euros ($109 billion) of US goods, to kick in from August 7 if talks fall short.
The counter‑tariffs are “intended to support negotiations, not to escalatethe tensions,” an EU diplomat emphasized.
EU’s stance on a 15‑percent levy
- Economist Eric Dor said the EU would “capitulate” by accepting a 15‑percent baseline.
- He warned it would harm businesses with profit margins too small to absorb the tariff hike.
- Most states prefer a deal to no deal, even with undesirable levies of 15 percent, but exemptions are key, with aircraft, steel, lumber, pharmaceutical products and agricultural goods under discussion.
Deadline and Trump’s 30‑percent threat
Trump’s 30‑percent threat on July 12 echoes a déjà vu situation. EU officials believed they were on the cusp of a deal after months of difficult talks.
“The final decision is in the hands of President Trump,” stressed another EU diplomat, even if Japan secured an agreement with 15‑percent flat levies, boosting expectations of a European deal.
EU’s “twin tracks” approach
- Trump said Washington and Brussels were in “serious negotiations.”
- If they agree to open up the union to American businesses, “we will let them pay a lower tariff,” the US leader added.
- EU trade spokesman Olof Gill reiterated the “twin tracks” approach: “Negotiation, and preparation for the event that the negotiations don’t lead to the outcome we want.”
Potential use of the “bazooka” anti‑coercion instrument
France has been most vocal in calling for the EU to bring out the “bazooka,” known as the anti‑coercion instrument. Paris says it has Berlin’s support, following talks this week between President Emmanuel Macron and Chancellor Friedrich Merz.
Under the instrument, the EU can curb imports and exports of US goods and services, intellectual property rights, and impose restrictions on access to the EU market, including public procurement.
It is an open question whether the bloc would deploy this powerful tool, described by Gill as the EU’s “most powerful deterrent.” If it did, retaliation would not be swift. Under the rules, the commission would usually have four months to investigate the third country it accuses of detrimental trade policies, then EU states would have eight to ten weeks to back any action. Only then would the commission have a green light to prepare measures within six months.
Challenges of opting for drastic action
Experts seem unconvinced the EU would opt for this “nuclear” option, especially when Europe wants to keep Trump’s support for Ukraine and the US security umbrella intact.
“It is questionable whether all EU members would ever agree to such drastic action against their principal security provider,” wrote Daniel S. Hamilton of Brookings Institution in a paper published this week.
