EU Races to Secure US Trade Deal as Trump’s Tariff Threats Loom, Prepares Retaliation Plan

Key Takeaways:

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1. Deadline Pressure: EU and US negotiators are in intensive talks to reach a trade deal by Aug. 1, when President Trump has threatened to impose 30% tariffs on most EU exports.
2. Unbalanced Deal Possible: The EU is willing to accept an unbalanced agreement favoring the US to avoid tariffs, but is also preparing a robust retaliation plan if talks fail.
3. Tariff Scope: The US is pushing for a near-universal tariff above 10% on EU goods, with limited exemptions for sectors like aviation, medical devices, and some manufacturing equipment.
4. Retaliation Measures: The EU is readying counter-tariffs on up to €93 billion of US goods, targeting politically sensitive products and industries, and may deploy its new anti-coercion tool for broader measures.
5. Escalation Risks: Failure to reach a deal could trigger a wider transatlantic trade rift, with both sides threatening further tariffs, export controls, and restrictions on public procurement.

What Happened?

With Trump’s Aug. 1 tariff deadline approaching, EU and US officials are scrambling to finalize a trade agreement. The US is demanding steep, broad-based tariffs with few exemptions, while the EU seeks to limit the damage and secure carve-outs for key sectors. Despite willingness to accept an asymmetrical deal, the EU is also preparing a suite of retaliatory measures—including tariffs on US goods and possible use of its anti-coercion instrument—should negotiations collapse.

Why It Matters?

The outcome of these talks will shape the future of transatlantic trade, impacting hundreds of billions in goods and key industries on both sides. A failure to reach a deal could escalate into a major trade war, disrupting supply chains, raising costs for businesses and consumers, and straining political relations.

The EU’s readiness to retaliate, including with new tools targeting US tech and investment, signals a more assertive stance in defending its interests.

What’s Next?

Negotiations will continue up to the deadline, with both sides under pressure to compromise. If no deal is reached, expect rapid escalation of tariffs and countermeasures, with potential spillover into other areas of US-EU cooperation. Markets and multinational firms will be watching closely for signs of a breakthrough or breakdown.