EU readies nearly $150 billion no deal plan to match US 30% tariff

Straits Times

23-07-2025

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EU member states have hardened their positions in response to the US stiffening its negotiating stance.
BRUSSELS – The European Union plans to quickly hit the US with 30 per cent tariffs on some €100 billion (S$149.78 billion) worth of goods in the event of no deal and if US President Donald Trump carries through with his threat to impose that rate on most of the bloc's exports after Aug 1.
As a part of a first wave of countermeasures, the EU would combine an already approved list of tariffs on €21 billion of US goods and a previously proposed list on an additional €72 billion of American products into one package, an European Commission spokesman said on July 23.
The US exports, which include industrial goods such as Boeing Co aircraft, US-made cars and bourbon whiskey, would face a levy that matches Mr Trump's 30 per cent threat, according to people familiar with the matter.
The tariffs would be prepared to come into force in August but only if there is no deal and the US implements its levies after the August deadline, said the people who spoke on condition of anonymity to discuss private deliberations.
The euro extended a fall after the report, down 0.3 per cent at US$1.1723, leading losses among major currencies. German bonds trimmed an earlier decline.
The plans come as EU member states, including Germany, have hardened their positions in response to the US stiffening its negotiating stance.
Berlin would be willing to even support the activation of the EU's anti-coercion instrument, or ACI, in a no-deal scenario, a government official said on condition of anonymity.
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This tool would come into play only if a deal fails to materialise.
Mr Trump announced two tariff deals on July 22 –
one with the Philippines and another with Japan, and both featured across-the-board duties on their imports that were lower than initially threatened.
Also noteworthy was the 15 per cent US levy on Japanese autos that was lower than the current 25 per cent rate on major car exporters including the EU.
European leaders are in Tokyo on July 23 and Beijing on July 24 for talks with some of the bloc's biggest trading partners in Asia.
The ACI is the 27-nation EU's most potent trade tool and a growing number of member states is pushing for its use if a deal isn't reached.
The instrument is primarily designed as a deterrent and is currently not on the table, with its activation requiring a qualified majority of member states to support the move.
The ACI would enable the EU to launch a broad range of retaliatory actions, including new taxes on US tech giants, targeted curbs on US investments, and limiting access to the EU market.
'We are now approaching the decisive phase in the tariff dispute with the USA. We need a fair, reliable agreement with low tariffs,' German Chancellor Friedrich Merz told reporters in Berlin on July 22 after a meeting with his Czech counterpart Petr Fiala.
'Without such an agreement, we risk economic uncertainty at a time when we actually need exactly the opposite.'
The Commission, the EU's executive arm, is discussing the instrument with member states, the people said.
While some capitals having been pushing to use the tool, most want to wait to see how the situation develops beyond Aug 1 before progressing discussions further to try to achieve the required majority, they added.
The overwhelming preference is to keep negotiations with Washington on track in a bid for an outcome to the impasse ahead of August's deadline.
EU and US negotiators are scheduled to continue talks on July 23. BLOOMBERG