The European Union believed it was close to securing a deal with the United States that would prevent a damaging trade war. But hopes of compromise took a sharp turn after American negotiators unexpectedly increased their demands. President Trump is now pushing for a baseline tariff of 15% or more on most European imports, far above the previously discussed 10%.
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This change sparked alarm across Europe. Germany, once the strongest advocate for diplomacy, has shifted closer to France’s more aggressive posture. European leaders are now preparing for the possibility that a deal may not happen at all. Behind closed doors, they are crafting tough countermeasures that could hit American businesses hard if talks collapse.
Brussels Arms Itself for a Trade War
Brussels had already offered significant compromises. EU negotiators proposed increasing imports of U.S. natural gas and semiconductors while agreeing to a 10% base tariff on goods. That alone was a tough sell for some member states. Now, with Washington asking for more, Europe is preparing to defend its own economic interests.
If no deal is reached by Trump’s self-imposed August 1 deadline, European officials say they are ready to retaliate. Measures under consideration go far beyond traditional tariffs. They include restrictions on U.S. digital services and limiting American companies’ access to public contracts across the continent.
Germany Joins the Hardliners
For months, Germany resisted calls for a confrontational approach. Berlin preferred a quick resolution and wanted to avoid escalating tensions with its largest trading partner outside the bloc. But as Trump’s demands grew more aggressive, German officials changed course.
Leaders in Berlin are now backing the use of a powerful legal tool known as the “anticoercion instrument.” This mechanism was created to strike back against countries that use economic pressure to bully Europe. Until now, it has never been used. But that may soon change, as momentum builds to show Washington that Europe won’t be pushed around.
Trade Talks Stall Despite Months of Effort
EU trade chief Maroš Šefčovič has spent months in active negotiations with U.S. officials. He has flown to Washington several times and made it clear the EU was willing to buy more American goods and meet the U.S. halfway. But those efforts have delivered little in return.
Trump has instead increased the pressure. In early July, he warned that the U.S. could impose 30% tariffs on European goods. European diplomats now believe that Washington is no longer committed to compromise. Some fear the Trump administration is using the threat of tariffs as leverage to extract more favorable terms with no intention of easing tensions.
Behind the Scenes, the EU Sharpens Its Tools
If negotiations fail, the EU has already drafted two large retaliation packages. These include tariffs on over $100 billion worth of U.S. exports, such as aircraft, whiskey, and peanut butter. While not yet enacted, both packages are ready to go with limited notice.
In parallel, the European Commission is outlining a third round of potential actions. These may include restricting U.S. firms’ access to Europe’s vast digital and procurement markets. Although officials stress that retaliation is not yet guaranteed, the preparations are real. EU leaders are signaling that they are serious about protecting their interests if Trump decides to escalate the trade fight.
Even Allies Are Losing Hope
Germany’s change of tone is significant, but it is not alone. Even EU nations that initially supported a softer approach now admit that a deal looks unlikely. The Trump administration’s latest demand for a 15% tariff floor caught many off guard. Adding to the frustration, there is no indication that U.S. auto tariffs will be lowered or that pharmaceutical goods will be spared.
The European Commission had tried to shield EU carmakers from Trump’s 25% auto tariffs. But hopes for such exemptions are fading. Trump’s team has also floated the idea of 100% tariffs on EU pharmaceuticals. These moves have further hardened Europe’s position.
Time Is Running Out
With less than two weeks until the August 1 deadline, both sides appear to be digging in. Trump’s latest public remarks suggest he is still pushing for a better deal. Commerce Secretary Howard Lutnick echoed that view, saying the White House believes an agreement is still within reach. But behind the scenes, there is growing concern that the two sides are too far apart.
European officials must now decide how much more they are willing to concede and what kind of response they are prepared to deliver if talks fail. As one EU diplomat put it bluntly, “All options will hurt.”
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