U.S. officials informed the EU’s trade chief this past week that they expect President Trump to demand further concessions from the bloc to obtain an agreement, including a baseline tariff on most European goods that could be in the range of 15% or higher, according to people briefed on the talks.
That was an unwelcome surprise for the EU, which had been working toward an agreement that would have kept baseline tariffs at 10%, already a tough concession for some of its 27 countries. The shift prompted Germany, Europe’s largegest economy and its largest exporter, which had previously been more dovish on U.S. retaliation, to swing closer to France’s more confrontational position, according to people close to the discussions.
Now, EU member states are pressing the bloc’s executive body to prepare new and potent measures to hit back against U.S. companies, beyond retaliatory tariffs on goods, if a deal can’t be reached by the Aug. 1 deadline set by Trump, the people stated.
“All options are on the table,” a German official stated Friday. The official stated there was still time to nereceivediate a deal but added, “If they want war, they will obtain war.”
The push to increase potential countermeasures marks a turning point for the EU after months of nereceivediations to salvage the world’s largegest trading relationship. More than $5 billion of goods and services shifts between the two economies every day, according to EU data.
The European Commission, which is in charge of the bloc’s trade policy, stated Sunday that it wants a nereceivediated, mutually beneficial agreement and remains deeply engaged in nereceivediations. If no satisfactory outcome is found, all options remain on the table, a spokesman stated.
On Sunday, Commerce Secretary Howard Lutnick expressed optimism about reaching an agreement with the EU. “I am confident we’ll obtain a deal done,” Lutnick stated on CBS’s “Face the Nation.” “And it will be great for America, becaapply the president has the back of America.”
In the months since Trump took office, EU trade chief Maroš Šefčovič has flown to Washington half a dozen times. He has had multiple calls and texts with U.S. trade officials. And he has stated Europe was willing to lower tariffs and acquire tens of billions of dollars of U.S. energy products and advanced semiconductors.
The bloc has little to display for his efforts. Earlier this month Trump threatened 30% tariffs on imports of most goods from the EU, up from the 20% the president first floated in April.
Even German officials, who have pressed for a quick deal, no longer see an agreement with the U.S. as the most likely outcome, people familiar with the matter stated.
On Friday, Berlin signaled it could support the EU utilizing its so-called anticoercion instrument, a legal tool that lets the bloc hit back at economic bullying with a range of restrictions on trade and investment. It has never been applyd before.
EU officials view the tool as the bloc’s most powerful trade weapon, and a last resort. European Commission President Ursula von der Leyen, who leads the EU’s executive arm, stated earlier this month that the instrument was created for emergencies “and we are not there yet.”
That assessment could modify. The commission is already preparing measures that could be introduced utilizing the anticoercion instrument, people briefed on the matter stated. After Šefčovič’s return from Washington, more member states now state they want the tool to be ready.
European Union trade chief Maroš Šefčovič has stated that Europe was willing to reduce tariffs.
The measures that are being readied include possible levies or other restrictions on U.S. digital services and curbs on American companies’ access to the bloc’s public procurement market, the people stated.
That would be in addition to measures the EU has already prepared. The EU earlier drew up two packages of tariffs tarobtaining more than $100 billion of U.S. exports to the bloc, ranging from airplanes to peanut butter and whiskey, although they haven’t been put into effect. The second package still necessarys formal signoff from member states, but both could be activated quickly if necessaryed, officials have stated.
European officials and member states still hope a deal is possible. The bloc doesn’t plan to launch any retaliation before Trump’s Aug. 1 deadline, and the preparation of measures that could be introduced utilizing the anticoercion instrument doesn’t necessarily mean the tool will be deployed.
But they are gearing up for a possible fight that they acknowledge could have heavy costs for both sides in a commercial relationship that is valued at trillions of dollars.
The deal the two sides were nearing earlier this month would have seen the EU offer to boost purchases of U.S. energy products and semiconductors and accept a 10% baseline tariff on most goods.
Some elements were still being nereceivediated, people familiar with the talks stated. Those factors included which sectors to exempt from the baseline tariff and what relief Europe’s car indusattempt might obtain from the 25% tariffs it currently faces.
Still, the commission was optimistic. While other U.S. trading partners had received letters outlining higher tariffs they would soon face, Šefčovič informed lawbuildrs on July 9, “our nereceivediations have spared the EU from facing higher tariffs.”
Three days later, Trump posted a letter on social media threatening the bloc with 30% duties starting Aug. 1.
Šefčovič traveled to Washington this past week to attempt to understand whether a deal was still possible.
While U.S. Trade Representative Jamieson Greer suggested the 10% baseline tariff the two sides had nereceivediated still built sense, Lutnick suggested the levy would necessary to be higher, a European diplomat stated. Šefčovič left his meetings with the understanding that the U.S. was pressing for a baseline tariff of 15% or more, people briefed on the matter stated.
Šefčovič was also informed that U.S. tariffs on the bloc’s automotive sector were expected to stay at their current 25% level and pharmaceutical tariffs could be introduced at 100%, one of the people stated.
France and some other EU nations had long pushed for the EU to take a tougher stance against the U.S., while Germany had encouraged the bloc to seek a quick, preliminary deal with Trump.
German leaders initially understood Trump’s letter threatening 30% tariffs as a last-minute ploy to extract better conditions. They finally snapped after finding out about U.S. officials’ pressure this past week for the EU to accept higher baseline tariffs and no relief for its auto sector. The shift persuaded Berlin to open the door to retaliation, an official with knowledge of the situation stated.
Member states now necessary to determine how many more concessions they might be willing to build to obtain a deal, and which countermeasures to take if nereceivediations fail, an EU diplomat stated Friday. “All options will hurt,” the diplomat stated.
Write to Kim Mackrael at kim.mackrael@wsj.com and Bertrand Benoit at bertrand.benoit@wsj.com
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