The European Union is bracing for a high-stakes trade showdown after President Donald Trump’s threat to impose a 30% tariff on all EU exports by 1 August. The ultimatum shattered expectations that a political framework was within reach, leaving EU leaders scrambling. At a meeting in Brussels on 14 July, EU trade ministers debated their next move: de-escalation or retaliation.
While Member States presented a united front in backing the European Commission’s negotiators, their reactions revealed a sharp divide on strategy.
One camp, led by France, is pushing for an immediate show of force. French Commerce Minister Laurent Saint Martin insisted the EU must demonstrate its “capacity to retaliate” with “no taboos”. This hawkish stance was echoed by Austria and Sweden, who urged the bloc to be “tougher negotiators” and wield its “economic muscles”.
Conversely, a more cautious group is urging restraint. Denmark, currently holding the EU presidency, advocated for a “dual message”: keeping the door open to talks while being ready to “flash some muscles”. This approach aligns with Germany, which is anxious to secure a deal that won’t harm its economy. Others, like Ireland’s Minister of State Thomas Byrne, believe it is too early for retaliation, stating plainly, “we’re certainly not at that stage”. Similarly, Hungary warned that “precipitate retaliatory actions” would be counterproductive.
This strategic divergence captures the EU’s core challenge: how to forge a common position that is strong enough to deter President Trump, yet flexible enough to allow for a last-minute deal.
Brussels’ possible countermeasures
In Brussels, the strategy is clear: continue the dialogue with the Trump administration, but prepare a strong response if negotiations fail. Trade Commissioner Maroš Šefčovič confirmed the EU would continue to negotiate in “good faith” but is preparing “for all possible scenarios”. This preparation is taking concrete shape in a series of powerful countermeasures designed to hit the U.S. economy where it hurts.
The Commission presented to Member States on Monday, 15 July, a second list of retaliatory tariffstargeting €72 billion worth of US imports. The 200-page list includes iconic American products such as bourbon whiskey, but its true significance lies in industrial goods. Topping the list are aircraft and aircraft parts, with nearly €11 billion in tariffs aimed squarely at plane maker Boeing, followed by cars, machinery, and medical devices. This proposed package comes on top of a previously approved (but currently suspended) list targeting €21 billion in U.S. goods, which was prepared in response to earlier US steel and aluminium tariffs.
Should this not be enough, officials are exploring an even more potent third wave of retaliation. For the first time, this could move beyond goods and target America’s Achilles’ heel: its large trade surplus in services and public procurement, as Commissioner Šefčovič laid out. While member states remain cautious about such a major escalation, the Commission is looking into tools that could restrict US firms’ access to the EU’s vast public markets. One option is the Anti-Coercion Instrument (ACI), a powerful trade “bazooka” that could be used to impose wide-ranging restrictions. Nonetheless, a less aggressive tool called the Enforcement Regulation is seen as a more likely first step. Moreover, Austria is advocating for sanctions against American digital companies.
Conclusions
The EU finds itself walking a fine line. It is talking tough and preparing a massive retaliatory package to preserve its negotiating leverage, but its primary goal remains securing a deal to avoid a mutually damaging trade war. President von der Leyen has instructed her team to “keep negotiating,” and officials believe the two weeks before the deadline are enough time to find an agreement.
The clock is now ticking towards 1 August. The immediate focus will be on last-ditch talks, with a high-level EU team travelling to Washington. At the same time, EU capitals will be studying the list of American goods subject to retaliation. The question will be whether diplomacy can prevail or if retaliation is the best way forward to protect European interests.
