EU prepares for worst-case scenario in trade war with Trump
As the days pass and August 1 approaches — the deadline set by U.S. President Donald Trump for trade negotiations — the EU is growing weary of Washington’s negotiating methods. The latest news from talks among member states does not exactly point to an agreement. “There is a growing consensus that the situation is unsatisfactory,” European diplomatic sources state, in the belief that preparations for potential failure must be accelerated. Other delegations and institutions point to similar sentiments. This translates into the need to prepare for the additional tariffs already in the pipeline — levies on U.S. products worth some €92 billion ($108 billion) — and to move on to finalizing additional countermeasures, such as taxing trade in services, which would trigger the anti-coercion mechanism.
The latest U.S. offer would set horizontal and general tariffs of between 15% and 20% on all imports from the EU, according to sources familiar with the latest steps in the talks. In this scenario, there would be exceptions for several generic drugs and medical devices, the aeronautical sector, some spirits (excluding wine, which would greatly reduce its impact), and industrial products that are difficult to find on the other side of the Atlantic. In contrast, the sectoral investigations the U.S. administration has initiated target sectors such as pharmaceuticals — on which Trump has threatened to impose 200% tariffs — and semiconductors.
When European Trade Commissioner Maros Sefcovic spoke about these products to member state ambassadors at their last meeting, the reception was lukewarm. “It’s not something we could accept,” notes someone familiar with the meeting, adding: “I’m not optimistic.” Along the same lines, some say they perceive “more pessimism” among EU partners. And this, coupled with the methods of negotiation and some rebuffs, means that “the mood is changing,” with a tendency to resort to the full range of possible responses, according to a third diplomatic source.
Sefcovic has traveled to Washington half a dozen times since Trump’s return to the White House, with his threats of a trade war, to meet with U.S. negotiators. Treasury Secretary Scott Bessent has led the way. On Tuesday, Bessent told Fox News that Washington is “about to announce a rash of trade deals in the coming days,” but did not specify whether the European Union was among them.
August 1, a ‘hard deadline’
The U.S. Treasury Secretary also insisted that August 1, unilaterally set by Trump once it became clear he wouldn’t be able to fulfill his previous threat (a truce that was scheduled to expire on July 9), is “a pretty hard deadline […] for all countries, because what I think will happen is that the tariff level will boomerang back to the reciprocal level from April 2. That doesn’t mean we can’t negotiate when the countries are at the higher level.”
When Trump missed his own July 9 deadline, he launched a letter-writing campaign to 25 countries and the EU. He wrote to European Commission President Ursula von der Leyen on July 12. In the letter, he threatened Europe with 30% tariffs if there was no agreement by August 1 and warned of counter-reactions if Brussels retaliated. “If you read the letter, you see the definition of coercion. This is a threat and it is not acceptable. The European Union, as an economic power, must command the respect of the United States and China if it truly wants to be respected,” EU sources point out.
It’s no coincidence that this source uses the term “coercion.” In order to activate the EU’s anti-coercion mechanism, a legal tool that opens up a wide range of sanctions beyond trade (it can punish the exchange of services, but also veto public procurement, prohibit the sale of certain products, or prohibit investments), the Commission must demonstrate that economic coercion exists.
One aspect on which several of the sources consulted agree is that everything that has happened in recent weeks has led several European capitals to harden their stance, including Berlin. Germany has been one of the strongest supporters of an agreement, but the lack of results for its export sectors (particularly automotives) may have led it to this position.
However, Berlin officially continues to insist that “an agreement with the U.S. administration that reflects the interests of all parties” is needed. “Trade barriers harm both parties equally,” the German Ministry of Economy simply states. However, EU sources familiar with recent meetings in Brussels point to a hardening of its stance, something that will be evident this Wednesday during the visit that French President Emmanuel Macron — a hardliner in the trade war — will pay to German Chancellor Friedrich Merz in Berlin.
The European Commission has strengthened to act in the case of failure. Despite everything, Brussels maintains the official line it has championed since the trade war broke out: absolute priority given to negotiations to find an agreed solution and advance preparations for a possible rebuttal. Its trade spokesperson, Olof Gill, has stuck to this premise: “In the current situation, the intention is not to launch any rebuttal, neither on the first nor the second list, before the August 1 deadline announced by the United States,” he explained, referring to the two groups of products on which the EU intends to impose tariffs (one of €20 billion and the other of €72 billion) if there is no solution.
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