The European Union is preparing a plan to impose additional tariffs on approximately €100 billion ($113 billion) worth of US goods in the event that ongoing trade negotiations fail to yield satisfactory results for the bloc. This move represents a significant escalation in trade tensions between the EU and the US and indicates that the European bloc is prepared for a strong response if protectionist measures from the US continue.
Preparation of Retaliatory Measures
According to sources familiar with the matter, the proposed retaliatory measures will be shared with member states as early as this week, with consultations lasting one month before the list is finalized. During this period, adjustments to the proposed list of goods subject to tariffs may occur.
The European Commission, the bloc’s executive body responsible for trade matters, also plans to share a document with the US this week aimed at restarting negotiations. The EU’s proposals are expected to include:
- Lowering trade and non-tariff barriers
- Boosting investments in the US
- Other measures aimed at improving trade relations
These steps come at a time when negotiations between the EU and US, which began in earnest last month, have made only minimal progress. It is expected that most American tariffs will remain in place despite diplomatic efforts.
Scope of the Trade Conflict
The EU stated on Tuesday that ongoing trade investigations by the US will increase the amount of EU goods facing tariffs to a total value of €549 billion. The new list of EU countermeasures will come on top of goods worth €21 billion that are already targeted by European tariffs in response to the US’s 25% duty on steel and aluminum exports.
The European Union agreed earlier this month to a 90-day delay in implementing these measures after the US lowered its so-called reciprocal rate on most EU exports from 20% to 10% while negotiations are taking place. However, this temporary easing does not signify a definitive resolution to the tense trade relations.
The US has previously imposed:
- A 25% duty on cars and some car parts
- Initiated investigations that could result in duties on imports of:
- Lumber
- Pharmaceuticals
- Semiconductors
- Critical minerals
- Trucks
Potential Impacts and Next Steps
The Commission has stated that all options are on the table in response to US tariffs. Future measures could target services and restrict exports, as previously reported by Bloomberg.
This development suggests that trade tensions between the world’s two largest economies may further escalate if compromises are not found during ongoing negotiations. The European Union is clearly signaling that it is prepared to take extensive countermeasures to protect its economic interests.
For European consumers and businesses, this means a potential increase in prices of American goods on the European market, while European manufacturers may face additional obstacles when exporting to the US. Economic analysts warn that a prolonged trade conflict could have negative impacts on the global economy, which is already facing a number of challenges including inflationary pressures and geopolitical tensions.
The coming weeks will be crucial in determining whether diplomacy will prevail over protectionism, or whether trade relations between the US and EU will take the path of mutual retaliatory measures with potentially far-reaching consequences for international trade.
