EU Approves $109 Billion Retaliatory Tariffs Against United States

The European Union approved a 93 billion euro ($109 billion) retaliation package targeting U.S. goods, including aircraft, cars, and bourbon, to be implemented on August 7 if trade negotiations fail. This move responds to threats by U.S. President Donald Trump to impose 30% tariffs on most EU exports starting August 1, with some steel and aluminum levies potentially reaching 50%.

Negotiations led by European Trade Commissioner Maros Sefcovic and U.S. Commerce Secretary Howard Lutnick have focused on a potential compromise. A base-case scenario involves a 15% baseline tariff, similar to a recent U.S.-Japan deal, with specific carve-outs for pharmaceuticals and aircraft. 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. Donald Trump characterized the likelihood of a deal as a "50-50 chance."

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. Member states, including Germany and France, have hardened their positions to ensure the bloc negotiates from a position of strength. The trade tension has already contributed to the EU downgrading its 2025 GDP growth forecast to 0.9%, while Italian industry groups warn of significant job losses and GDP contraction by 2026.