The European Union is preparing a package of tariffs that will be charged on goods worth 72 billion euros ($84 billion) against the United States, despite reaching a trade deal and bolstering efforts to avoid a transatlantic trade war with President Donald Trump.
The European Commission, which oversees the EU’s trade policy, is understood to have compiled a list of various US imports ranging from automobiles to bourbon after Trump declared on Sunday that he would collect 30% “mutual” tariffs on European imports from August 1st.
The EU and the US have been locked in trade negotiations for months after Trump set a 20% mutual tariff on EU goods in April. They were dropped to 10% soon after, waiting for a three-month pause before the president’s latest 30% salvo.
Following Trump’s announcement, French and German government bond prices have fallen to a rare low since the 2009-11 eurozone debt crisis.
What tariffs have Trump announced on the EU?
President Trump said he would impose a 30% tariff on imports of goods from the EU from August 1st. He says he wants to readjust the US’ $235.6 billion trade deficit (over exports) it has in the EU.
EU officials hoped that damage could be limited by agreeing to a baseline tariff of about 10% (at the current level) with additional sculptures for key sectors like cars. But Trump’s recent announcement came through letters and shattered those hopes.
Trump sent similar letters to 23 other trading partners in the last eight days, including Canada, Japan and Brazil, setting tariff rates on blankets ranging from 20% to 50%, and 50% tariffs on copper imports from all countries to 50%.
Earlier this year, Trump also slapped 25% tariffs on European steel and aluminum, and automobiles, to reduce reliance on imports and promote more domestic production.
In response, the EU has announced retaliatory tariffs on US goods worth $23.8 billion (6% of US imports total), with EU officials describing US tariffs as “unfair and damaging.” However, the implementation of these EU tariffs was delayed as a goodwill gesture during ongoing trade consultations.
On April 7, European Commission head Ursula von der Leyen offered Trump an alternative in the form of a zero-zero tariff transaction on industrial products, including cars. But Trump said her proposal didn’t address concerns about the trade deficit.
How has the EU responded to new US tariffs?
Von Der Leyen has previously indicated that 27 BLOCs will continue to negotiate until the August 1 deadline.
However, on Monday, EU trade commissioner Maros Sefcovic said there is still a “big gap” between the two sides, and at a new 30% rate, it is almost impossible to continue trading as they are used to in transatlantic relations. “The truth is, we’re banning trade,” he said.
Therefore, the EU is currently preparing retaliatory tariffs in the event of breakdowns before the deadline, Sefcovic said. “We need to protect the EU economy and we need to go to these rebalancing measures.”
Before discussing trade with EU ministers, he told reporters:
The EU’s latest tariff list covers 72 billion euros ($84 billion) worth of goods, which can be seen in Politico and Bloomberg.
The tariff rate is still unknown, but it applies to US aircraft and parts worth 11 billion euros ($13 billion). Other items include cars, mechanical, electrical appliances and chemicals.
The list also covers produce such as fruits and vegetables, as well as alcoholic beverages such as bourbon and rum. Going forward, the Commission’s Trade Policy Committee will need to formally approve the list before applying any retaliatory measures.
However, the Bullock is understood to be full of disagreements over US trade. While Germany is urging rapid transactions to protect its industry, other EU members, particularly France, have argued that EU negotiators should not cave into “asymmetric” transactions in favor of the US.
Danish Foreign Minister Lars Rocke Rasmussen told reporters in Brussels it was too early to impose counter-mysses. “But you need to be prepared to use all the tools.” He added: “If you want peace, you have to prepare for war, and I think that’s our place.”
How does Europe sell to the US?
In 2024, the US EU’s commodity trade reached nearly $1 trillion, and the EU became the largest trading partner in the US.
Overall, the US purchased $235.6 billion in goods than it was sold to the 27 countries that make up the EU. Trump hasn’t made any secrets that he wants to reduce his trade deficit. Meanwhile, the US has earned surplus in its services in the EU.
The US mainly buys medicines from the EU, as well as mechanical appliances, cars and other non-railway vehicles. The US alone accounts for 21% of EU goods exports.
The US exports mainly fuels, medicines, machines and aircraft to the EU.
How will tariffs affect the US and European economies?
Barclays economists estimate that if US tariffs on 35% EU goods cover both mutual duties and sectoral obligations, they will shave 0.7% from eurozone production, dropping to just 0.4% annual growth rate, along with 10% theoretical retaliation from Brussels.
This could derail much of the already small growth in the eurozone. The EU struggled to regain its foothold in the wake of the Covid-19 pandemic, and the surge in energy prices following Russia’s invasion of Ukraine increased tensions.
Economic forecast consultant Oxford Economics estimated Monday that a 30% tariff could push the EU to the “end of the recession.”
Meanwhile, the estimates in April showed that mutual and sector tariffs ranging from 20% to 50% would cost Germany’s 4.3 trillion euros ($5 trillion) economy, according to the German Institute of Economic Research IW.
“It will interfere with everything and hit the German export industry at its core, so much of its economic policy efforts will have to be postponed,” German Prime Minister Friedrich Merz said of the potential mutual rate of 30% of the US.
Meanwhile, measures from the EU will hit certain US industries violently. As Europe is the top five markets for US agriculture (particularly Soya and corn), European tariffs could reduce US farm income and anger major Trump constituencies. The same applies to the automotive and airplane parts sectors.
