EU Approves 93 Billion Euro Tariffs Amid US Trade Dispute

The European Union approved a 93 billion euro retaliation package targeting U.S. goods, including aircraft, cars, and bourbon, to be implemented on August 7 if trade negotiations fail. This move follows threats from President Donald Trump to impose 30% blanket tariffs on EU exports starting August 1, with some steel and aluminum products facing levies as high as 50%.

Negotiations led by European Trade Commissioner Maroš Šefčovič and U.S. Commerce Secretary Howard Lutnick have focused on a potential compromise. A base-case scenario involves a 15% baseline tariff rate, mirroring a recent U.S.-Japan agreement. However, the U.S. is demanding increased European energy purchases and the removal of value-added tax (VAT), which the EU considers a non-starter. White House Deputy Press Secretary Kush Desai dismissed reports of a potential deal as "speculation."

Beyond tariffs, the EU is considering its Anti-Coercion Instrument, a high-level defense tool that could restrict U.S. access to public procurement and intellectual property rights. The trade tension has already contributed to a downgraded 2025 EU GDP growth forecast of 0.9% and a sharp appreciation of the euro. To reduce reliance on the U.S. market, the EU is diversifying trade through a new agreement with Mercosur and increased engagement with African markets and China.

President Donald Trump characterized the likelihood of a deal as a "50-50 chance, maybe less than that." While the European Commission maintains that a negotiated outcome is within reach, the approved counter-tariffs serve as a tool to ensure the bloc negotiates from a position of strength.