Summary
The European Union (EU) is poised to announce a new series of countermeasures in response to tariffs recently imposed by the United States on European steel, aluminium, and a broader range of goods. These U.S. tariffs, reinstated and expanded in 2025 under Section 232 of the Trade Expansion Act, represent a significant escalation in transatlantic trade tensions that have persisted since 2018, when the Trump administration first introduced tariffs citing national security concerns. The EU’s forthcoming measures are designed to match the increased scope and value of American tariffs, targeting approximately €18 billion worth of U.S. exports, including manufactured products and agricultural items.
This latest round of EU actions follows a two-step strategic approach: reinstating previously suspended countermeasures from 2018 and 2020, and preparing new tariffs and additional trade restrictions to pressure the U.S. into negotiations. Central to the EU’s response is the potential deployment of the 2023 Anti-Coercion Instrument (ACI), a legal framework allowing more targeted and flexible retaliation against economic coercion, which could extend beyond tariffs to include business licenses and intellectual property rights. However, the use of the ACI is tempered by procedural requirements and economic considerations, given the deep interdependence between the EU and U.S. economies, which involves €4.7 trillion in bilateral investments and millions of jobs.
The EU has also initiated formal dispute proceedings at the World Trade Organization (WTO), challenging the legality of the U.S. tariffs and asserting that they violate fundamental WTO rules. This legal action underscores the broader contest over adherence to multilateral trade agreements amid rising unilateral protectionist measures. While some EU member states advocate for more aggressive targets, including U.S. service sectors and technology firms, the European Commission emphasizes negotiation as the preferred path to resolving the dispute, seeking to avoid prolonged tariff escalations detrimental to both economies.
Overall, the unfolding EU response reflects a complex balancing act between defending European economic interests and preserving the crucial transatlantic partnership. As the EU prepares to unveil its countermeasures, the situation remains fluid, with the potential for both intensified trade conflicts and diplomatic breakthroughs in the coming months.
Background
Trade tensions between the European Union (EU) and the United States (US) have escalated significantly in recent years, primarily centered around tariffs imposed on steel, aluminium, and other goods. The initial round of disputes began in 2018 when the US, under President Donald Trump’s administration, introduced tariffs of 25% on steel and 10% on aluminium imports from the EU, citing national security concerns. The EU responded with retaliatory measures, imposing tariffs on a range of US products including boats, bourbon, and motorcycles, aimed at rebalancing the trade impact.
Following these events, additional tariffs were introduced in 2020 affecting derivative steel and aluminium products, expanding the scope of the dispute. The US also threatened to impose tariffs on cars and car parts, which intensified trade frictions. These tensions re-emerged in March 2025 when the US imposed tariffs of up to 25% on steel, aluminium, and certain related products imported from the EU and other trading partners. This latest US action targeted a broader array of goods and involved higher tariff rates, prompting the EU to respond swiftly.
The European Commission announced a two-step approach to counter the new US tariffs. First, it allowed the suspension of existing EU countermeasures from 2018 and 2020 to lapse by the end of March 2025, leading to their reinstatement from April 1, 2025. Second, it launched a process to impose additional countermeasures targeting approximately €18 billion worth of US exports, ensuring that EU responses matched the increased value of trade affected by the US measures. These measures aim to pressure the US into negotiations while preparing the EU for a prolonged period of heightened tariffs if talks fail.
The EU’s strategic response is informed by legal and economic considerations. While the EU possesses new tools, such as the 2023 Anti-Coercion Instrument (ACI), designed to allow more targeted and legally grounded countermeasures, it has so far relied on existing enforcement regulations for immediate action. The ACI defines economic coercion and requires thorough assessment of potential impacts on EU businesses before implementation, which could delay responses by up to a year. Given the extensive economic interdependence between the EU and US—amounting to €4.7 trillion in mutual investments and supporting millions of jobs on both sides—careful calibration of measures is essential.
Amid these developments, EU-US trade relations remain complex. While tariffs raise prices and reduce competitiveness of affected goods, they also incentivize affected countries to seek closer economic ties to counterbalance the impacts of protectionism. The EU continues to emphasize negotiation as its preferred course of action, aiming to resolve disputes through dialogue rather than prolonged tit-for-tat tariff escalations.
Details of the New EU Measures
The European Union has prepared a new set of countermeasures in response to the U.S. tariffs imposed under Section 232, particularly targeting steel, aluminum, and additional manufactured goods. These measures come as a reaction to the broader scope and higher value of U.S. tariffs enacted in 2023, which the EU views as significantly impacting its exports. The European Commission has aligned the timing of these countermeasures with the U.S. tariffs to provide additional room for dialogue, underscoring a strategic and phased approach rather than immediate escalation.
The planned EU response targets approximately €18 billion worth of U.S. goods, including a variety of manufactured products and agricultural items such as soybeans, meats, bourbon, sewing machines, airplane parts, and car components. These tariffs, mostly set at 25%, are structured to be implemented gradually, starting mid-April with subsequent phases in May and December. This staggered timing is intended to allow space for negotiations while signaling the EU’s readiness to escalate if necessary.
Beyond tariff impositions, the EU is considering additional commercial policy measures, such as the suspension of tariff concessions under the World Trade Organization (WTO) Agreement on Safeguards and potential bans on the sale of scrap aluminium and scrap ferrous waste. These measures aim to counterbalance the economic harm caused by U.S. tariffs on approximately €8 billion of EU steel and aluminum exports and to ensure parity with the increased U.S. tariffs affecting European trade.
Significantly, the EU is exploring the deployment of its 2023 Anti-Coercion Instrument (ACI), a legal framework designed to protect the Union and its member states from economic coercion by third countries. The ACI allows for more targeted and flexible responses compared to the existing Enforcement Regulation (EU No 654/2014) and could potentially extend to business licenses and intellectual property rights. This move marks an evolution in the EU’s ability to respond to trade disputes, offering a broader arsenal of tools beyond tariffs alone.
Within member states, discussions are ongoing regarding the scope and targets of these measures. Some EU nations advocate for targeting U.S. service sectors, including major American technology companies, while others favor a more cautious approach. European Commission President Ursula von der Leyen has expressed openness to zero-for-zero tariff agreements on cars and industrial goods, though the U.S. has previously rejected such proposals.
EU’s WTO Dispute Proceedings
The European Union has initiated formal dispute proceedings at the World Trade Organization (WTO) in response to tariffs imposed by the United States, which the EU contends violate fundamental WTO rules. The EU’s executive branch has lodged a request for consultations specifically challenging the U.S. tariff measures on cars, car parts, and other imports, characterizing these tariffs as “blatantly violat[ing] fundamental WTO rules”. This action is part of a broader strategy to reaffirm the importance of adherence to internationally agreed trade regulations and to counter what the EU describes as unilateral disregard of these rules by the U.S.
The dispute follows a prior WTO arbitration ruling which found that the EU had no legal basis to impose countermeasures on imports from the U.S. relating to NASA and Department of Defense research and development subsidies. The WTO arbitrator rejected the EU’s request for countermeasures in that case, limiting the scope of permissible tariffs connected only to a now-repealed tax break. In contrast, the current EU challenge focuses on the legality of U.S. reciprocal tariff policies and duties.
Commission President Ursula von der Leyen has publicly emphasized the EU’s readiness to respond robustly, including preparing WTO litigation and considering possible countermeasures. This response comes amid concerns over the U.S. administration’s approach to preferential tariffs, which, at first glance, appear to contravene the WTO’s Most-Favoured-Nation (MFN) principle. However, the European Commission points to Article 24 of the WTO Agreement, which allows for exceptions through free trade areas or interim agreements that cover a substantial portion of trade. The U.S.-EU deal announced on 21 August, viewed as a first step toward liberalizing and lowering tariffs reciprocally, is cited as part of this exception framework.
The EU’s WTO dispute proceedings represent a continuation of ongoing tensions over trade rules enforcement between the two parties, highlighting the complexities of balancing unilateral tariff policies with multilateral trade obligations under the WTO system.
Responses and Reactions
The European Union has adopted a multifaceted approach in response to the tariffs imposed by the United States under the Trump administration, particularly the 25% tariffs on steel, aluminum, and car imports. European Commission President Ursula von der Leyen emphasized the need for the EU to “act to protect businesses and consumers” amid these measures, highlighting the expanded scope of the EU’s retaliatory actions compared to earlier responses.
The EU initially implemented countermeasures targeting approximately €21 billion worth of US products, which were temporarily suspended following a 90-day truce announced by President Trump. However, these countermeasures are set to be reactivated, alongside a second wave of retaliatory measures aimed at tariffs on cars and other reciprocal tariffs announced in early April 2025. The Commission is actively investigating the type and level of further countermeasures, which may include suspending tariff concessions under WTO rules and imposing increased customs duties on select US products. These measures specifically address the economic harm caused to €8 billion worth of EU steel and aluminium exports as well as new tariffs impacting over €18 billion of EU exports.
Negotiations between the EU and the US have been ongoing, with EU officials working towards a political understanding to resolve the tariff dispute before the mid-July 2025 deadline, rather than pursuing a comprehensive trade deal. The EU maintains a “clear preference” for negotiations to achieve a balanced and mutually beneficial agreement, as reiterated by French Trade Minister Laurent Saint-Martin and other EU representatives. This diplomatic effort is seen as a way to avoid prolonged trade tensions, which are widely regarded as harmful to all parties involved.
Beyond immediate retaliatory measures, the EU is considering deploying an ‘anti-coercion instrument’ (ACI), adopted in 2023, which would enable it to counteract economic coercion by targeting business licenses, intellectual property rights, and potentially the US trade surplus in services. However, the application of the ACI faces challenges due to procedural timelines, as countermeasures under this instrument can take up to a year to implement. In the interim, the Enforcement Regulation remains the primary mechanism for the EU’s responses.
The overall EU strategy aims both to pressure the US into negotiating a deal and to prepare for the possibility that heightened tariffs may persist, thereby ensuring the EU’s readiness to protect its economic interests effectively. The Commission continues to engage in discussions with US counterparts to lift tariffs and foster a stable trade relationship, emphasizing the need for ongoing dialogue and cooperation.
While the EU’s measures are firm, officials stress that tariff wars are detrimental to all sides, and the bloc remains open to negotiations to resolve disputes amicably. The dynamic between retaliation and negotiation characterizes the EU’s current posture amid the evolving transatlantic trade tensions.
Economic and Political Analysis
The imposition of tariffs by the United States on European steel and aluminum imports in 2018, at rates of 25% and 10% respectively, marked a significant escalation in trade tensions between the EU and the US. These measures, justified by the US on national security grounds, provoked retaliatory tariffs from the EU, which in turn led to threats of further US tariffs on cars and car parts. The EU’s response has been carefully calibrated, aiming not only to protect its industries and consumers but also to minimize the negative impact on its own economy, as mandated by Regulation (EU) 2023/2675 which requires the Commission to consider the economic effects on EU operators before implementing countermeasures.
The political landscape surrounding these trade disputes has been characterized by a combination of firm stances and ongoing negotiations. Despite the initial harsh measures, both sides have demonstrated a willingness to seek compromise. In March 2025, the EU expressed its intention to delay the imposition of retaliatory tariffs to allow more time for dialogue, especially after the US threatened to levy a 200% tariff on European wines and alcoholic beverages. This gesture underscored the EU’s preference for negotiation over escalation, with European Commission President Ursula von der Leyen emphasizing the importance of protecting transatlantic economic ties, which encompass €4.7 trillion in bilateral investments and support millions of jobs on both sides of the Atlantic.
Strategically, the EU has explored a variety of response options beyond direct tariff imposition. Discussions have included targeting the US trade surplus in services and utilizing the “anti-coercion” instrument introduced in 2023, which could affect business licenses and intellectual property rights. Although some European policymakers have suggested more aggressive measures—such as targeting American tech companies—the official stance has been to avoid tariffs where possible and prioritize negotiation.
From an economic perspective, the ongoing tariff conflict poses risks to supply chains and business operations across multiple sectors. Companies are urged to closely monitor developments, as the evolving tariff landscape could significantly alter trade flows and costs. Moreover, the broader context involves compliance with World Trade Organization (WTO) rules and leveraging exceptions such as free trade areas under Article 24 of the GATT, which the EU cites in its efforts to negotiate reciprocal tariff reductions with the US.
Ultimately, the EU’s approach reflects a balance between asserting its trade interests and maintaining the transatlantic economic relationship. The July 2025 agreement between Presidents von der Leyen and Trump on tariffs and trade signals progress, but the EU remains prepared to escalate measures if negotiations fail, underscoring the strategic importance of this ongoing economic and political dialogue.
The content is provided by Blake Sterling, Front Signals
