Summary
The European Union (EU) is poised to announce its next steps regarding tariff countermeasures in response to a series of tariffs imposed by the United States on various EU imports. These U.S. tariffs, introduced primarily under the Trump administration and maintained with modifications thereafter, targeted products such as steel, aluminium, automobiles, and other goods, aiming to protect domestic industries and address trade imbalances. In retaliation, the EU approved its own set of countermeasures, including 25% duties on selected U.S. imports worth approximately €21 billion, with plans to expand or reinstate these measures amid ongoing trade tensions.
The EU’s response is grounded in both its internal legal framework, particularly Regulation (EU) No 654/2014 (the Enforcement Regulation), and international trade rules under the World Trade Organization (WTO). The EU regards the U.S. tariffs as safeguard measures, allowing it to pursue proportional countermeasures after consultations with member states via a comitology procedure. Additionally, the EU has obtained WTO authorization to impose retaliatory tariffs up to $4 billion annually related to long-standing disputes over Boeing subsidies, reinforcing the legitimacy of its actions within the global trade system.
This unfolding trade dispute represents one of the most significant challenges to transatlantic economic relations in recent decades, with potential consequences for global trade stability and economic growth. The EU aims to balance effective retaliation with minimizing adverse impacts on its own economy by soliciting input from affected industries and considering exemptions where necessary. Politically, the situation underscores a complex dynamic where the EU seeks to both negotiate a zero-for-zero tariff agreement with the U.S. and prepare robust countermeasures should negotiations falter.
The upcoming announcement marks a critical juncture in the EU’s trade policy, reflecting broader geopolitical and economic considerations amid an era of rising protectionism and shifting global alliances. Observers highlight the risk of escalating tariffs disrupting supply chains, increasing costs for consumers and businesses, and affecting millions of jobs dependent on transatlantic trade, underscoring the high stakes involved in the EU’s decision-making process.
Background
The European Union (EU) has been engaged in a series of trade tensions with the United States primarily stemming from the imposition of tariffs by the U.S. government on various imports. These tariffs, introduced under President Donald Trump’s administration, targeted goods from multiple countries, including the EU, with the stated goal of boosting American manufacturing and protecting domestic industries. The tariffs are typically levied as a percentage of the value of imported goods, thereby increasing their prices and giving a competitive advantage to domestic producers.
In response to U.S. tariffs on steel, aluminium, and other products, the EU approved retaliatory duties mostly at 25% on U.S. imports worth approximately €21 billion ($23 billion), covering items such as maize, wheat, motorcycles, and clothing. These countermeasures were initially paused following a 90-day suspension announced by President Trump but were set to be reconsidered as tensions persisted.
The U.S. tariffs, including those imposed under Section 232 of the Trade Expansion Act of 1962, have affected a range of products such as automobiles, pharmaceuticals, semiconductors, and lumber. The United States has expressed intentions to cap tariffs on certain EU-origin goods at 15% while considering reductions on automobiles and automobile parts following legislative changes by the EU. Meanwhile, the EU has been evaluating commercial policy measures as outlined in Article 5 of the Enforcement Regulation, including the suspension of tariff concessions and the imposition of increased customs duties on select U.S. goods.
The dispute has extended into the World Trade Organization (WTO) framework, where the EU has sought authorization to impose countermeasures on U.S. goods and services up to an annual value of $4 billion, linked to longstanding disagreements over subsidies to Boeing. This WTO authorization supports the EU’s position in enforcing trade remedies consistent with international rules.
The ongoing trade friction represents one of the most significant challenges to free trade since the 1930s, with concerns about potential harm to the global economy and risks of stagflation. The European Commission has been carefully considering its next steps, balancing the need for effective retaliation against the desire to minimize negative impacts on the EU economy. This includes seeking input from economic operators and weighing the potential for exemptions or negotiated resolutions.
The EU’s decision-making process for countermeasures follows a comitology procedure that involves consultations with member states before adopting any measures. Previous countermeasures introduced in 2018 and 2020 were temporarily suspended to allow for negotiations, but with the continuation of U.S. tariffs, the EU has prepared to reinstate and possibly expand its response.
Legal Framework
The legal basis for the European Union’s countermeasures against U.S. tariffs is primarily grounded in Regulation (EU) No 654/2014 of the European Parliament and of the Council, adopted on 15 May 2014. This Enforcement Regulation governs the exercise of the Union’s rights for the application and enforcement of international trade rules, particularly those established under the auspices of the World Trade Organization (WTO). It amends earlier regulations to ensure the Community’s effective response to international trade disputes and safeguard its commercial interests.
The EU considers the U.S. measures as safeguards, thereby invoking the Enforcement Regulation to justify its counteractions. The procedure for adopting countermeasures follows the comitology process, where EU Member States are consulted and must endorse the proposed measures before their adoption and enforcement. This ensures a collective and coordinated EU response to external trade challenges.
The contemplated countermeasures include the suspension of tariff concessions under Article 8 of the WTO Agreement on Safeguards and the imposition of increased customs duties on selected U.S. products. However, the specific type and level of these countermeasures remain under investigation and have not yet been finalized. The Commission’s approach also takes into account the economic impact on EU operators, in line with the requirements of the Anti-Coercion Instrument (ACI). The ACI mandates the Commission to assess and minimize any negative effects on the EU economy before adopting or amending countermeasures, providing businesses an opportunity to seek exemptions.
In parallel, the EU utilizes WTO dispute settlement mechanisms to legitimize and support its actions. For example, in the longstanding subsidy dispute with the U.S. concerning Boeing, the WTO Dispute Settlement Body authorized the EU to impose countermeasures on U.S. goods and services up to a value of US$4 billion annually. This highlights the EU’s reliance on both internal regulations and international trade law frameworks to enforce its rights and respond to trade disputes.
Internal EU Decision-Making Process
The decision-making process within the European Union regarding trade policy and countermeasures against external tariffs involves multiple institutions and levels of consultation. The European Commission plays a central role in negotiating trade agreements and proposing responses, but its work is guided and ultimately decided upon by the Member States through the Council of the European Union (Council of Ministers), which consists of government representatives from all Member States.
After the Treaty of Lisbon entered into force in 2009, the European Parliament’s involvement in trade policy has increased significantly, requiring its approval alongside the Council for free trade agreements and legislative trade measures. Within the Council, the Trade Policy Committee (TPC) facilitates discussions at the expert level, with all Member States represented, covering specialized areas such as services and investments. National positions, such as Finland’s, are further deliberated domestically before confirmation by the national parliaments, ensuring democratic oversight over trade policy stances.
When the European Commission considers countermeasures, such as those responding to U.S. tariffs, it must seek information and views on the economic impact of such measures on EU operators to minimize negative consequences. This requirement allows businesses to advocate for exemptions or adjustments in the proposed measures. The Commission prepares an implementing draft detailing the scope and nature of the countermeasures, often involving suspension of tariff concessions or increased customs duties under the Enforcement Regulation (Regulation (EU) No 654/2014) and WTO safeguard provisions.
The proposed countermeasures undergo a comitology procedure whereby the Member States are consulted and requested to endorse the measures through a qualified majority vote before adoption. This process typically concludes with the adoption of the act imposing countermeasures, which then enters into force. Safeguards are also put in place to ensure that the responses are efficient, proportionate, and developed with input from Member States’ authorities and stakeholders.
Upcoming Announcement
The European Union is preparing to announce further details regarding its proposed countermeasures to the United States tariffs in an update scheduled for Thursday. European Trade Commissioner Maros Sefcovic stated that the forthcoming announcement will outline the next preparatory steps, focusing both on possible rebalancing measures and areas crucial for ongoing discussions between the two parties. These measures follow the EU Commission’s initial proposals, which were published earlier in the week and formally adopted at a Brussels meeting shortly after the imposition of a 20% tariff on most European goods by the U.S..
The EU’s countermeasures are designed to be swift and proportionate responses to the U.S. tariffs, which affect imports of European steel, aluminium, automobiles, and other goods. The scope of the countermeasures could cover U.S. exports worth up to €26 billion, matching the economic impact of the U.S. tariffs on the EU.
The EU’s response may include suspending tariff concessions under the WTO Agreement on Safeguards and imposing increased customs duties on selected U.S. products. However, the exact type and level of these countermeasures remain under investigation and will be clarified in the upcoming announcement. The Commission continues to navigate complexities related to the U.S. tariffs, especially considering potential future actions by the U.S. government under different legal bases such as national security claims, which could affect the EU’s legal options for retaliation.
This announcement represents a critical step in the EU’s trade policy strategy to defend its economic interests and maintain leverage in ongoing trade negotiations with the United States.
Political and Economic Context
The escalation of tariff measures between the United States and the European Union has taken place against a backdrop of longstanding trade tensions characterized by large and persistent U.S. goods trade deficits, as highlighted in the April 2025 Executive Order 14257 aimed at regulating imports through reciprocal tariffs. The U.S. administration’s imposition of sweeping tariffs, including 25% duties on steel, aluminum, and autos, alongside a general 20% tariff on most EU goods, has prompted a strong reaction from the EU, which views these measures as disruptive not only to transatlantic trade but also to the broader global economy.
From a political standpoint, the European Commission plays a central role in shaping and responding to trade policy, operating under the guidance of the Member States and the Council of the European Union, which approves negotiation mandates and international agreements. Since the Treaty of Lisbon in 2009, the European Parliament’s involvement has increased, requiring its approval on free trade agreements and significant legislative measures related to trade policy. National parliaments, such as Finland’s, also have an oversight function, especially concerning sectors under Member State competence.
The EU’s strategy reflects a dual approach: it seeks to engage in negotiations with the U.S. to reach a zero-for-zero tariff agreement that would eliminate tariffs entirely, while simultaneously preparing for countermeasures should talks fail. This position underscores the EU’s intention to project both willingness to compromise and readiness to defend its economic interests robustly. EU leaders, including European Commission President Ursula von der Leyen, have emphasized the gravity of the situation, warning of “immense consequences” for the global economy and indicating that a range of countermeasures, potentially including those targeting digital services, could be deployed.
Economically, the tariff conflict poses significant risks to both sides. U.S. exports to the EU support approximately 2.3 million American jobs, while EU investments in the U.S. employ around 3.4 million people, highlighting the intertwined nature of the transatlantic economic relationship. Tariffs increase costs for consumers and businesses, reducing market income and effectively acting as a tax burden that could reach an average of $1,300 per U.S. household in 2025, escalating to $1,600 in 2026 if the tariffs remain in place. For EU companies, uncertainty about tariffs complicates supply chains and investment decisions, potentially hindering growth and access to essential raw materials.
The EU’s response mechanism is informed by the need to balance retaliation with minimizing harm to its own economic operators. The Commission is obligated to consider the economic impact of countermeasures on EU businesses and has been preparing further details on possible rebalancing actions to be announced imminently. This includes seeking input from affected industries to advocate for exemptions where necessary, with implementation relying on the Enforcement Regulation framework.
Reactions and Responses
In response to the US imposition of tariffs, particularly the 25% duties on steel and aluminium, the European Commission has outlined targeted retaliatory measures aimed at impacting production in Republican states and companies linked to the Trump administration. These measures are designed to be proportionate and will cover a broad range of US imports, while also activating the EU Anti-Coercion Instrument to escalate the EU’s response to external economic pressure if necessary.
These retaliatory actions stem from multiple trade disputes and policies, including the WTO large civil aircraft dispute, Section 232 trade actions, and Section 301 trade actions concerning China’s technology and intellectual property practices. Additionally, Executive Orders addressing synthetic opioids, illicit drug flows, and reciprocal tariff modifications have contributed to the context for these measures.
The European Commission, while spearheading trade policy initiatives, operates under the guidance of the Member States through the Council of the European Union, which holds decision-making authority on negotiation mandates and trade agreements. This collective approach strengthens the EU’s bargaining position in international trade and allows the Union to negotiate agreements that facilitate market access, protect intellectual property, and promote sustainable development and human rights.
Further consultation is planned with the United States and US traders on issues such as the digitalisation of trade procedures and the implementation of proposed EU Customs Reform legislation. Both parties have expressed a commitment to enhancing economic security alignment, strengthening supply chain resilience, and cooperating on investment reviews, export controls, and combatting duty evasion. This reflects a broader intent to address non-market policies of third countries through complementary actions.
Analysis and Implications
The forthcoming announcement of the European Union’s next steps on tariff countermeasures against the United States is poised to have significant trade and economic implications on both sides of the Atlantic. While the specific type and level of countermeasures remain under investigation, the European Commission is considering commercial policy options such as suspending tariff concessions under the WTO Safeguards Agreement and imposing increased customs duties on certain U.S. products. These potential measures reflect a calibrated response mechanism aimed at rebalancing trade obligations in reaction to the U.S.’s recent tariff actions and broader trade practices perceived as lacking reciprocity.
One critical challenge facing the EU is the procedural timeframe required to implement countermeasures under the current regulatory framework. Typically, the process can take up to a year, limiting the EU’s agility in responding swiftly to tariff threats. Nonetheless, provisions exist that could expedite action in emergency situations, suggesting a degree of flexibility depending on political will and urgency. This timing factor is particularly relevant given the political rhetoric around avoiding a full-scale trade war, as voiced by key EU leaders who emphasize negotiation while preparing for an “adequate” response if necessary.
The broader economic stakes of any escalation are considerable. U.S. exports of goods and services to the EU support millions of jobs in the United States, while EU investments in the U.S. similarly sustain millions of American jobs. Consequently, any imposition of tariffs or countermeasures risks raising costs for businesses and consumers in both regions, potentially disrupting deeply intertwined transatlantic supply chains and commercial relations. The EU’s collective negotiation power enhances its ability to engage multilaterally and bilaterally to seek mutually beneficial trade arrangements, but the evolving landscape underscores the complexity of managing trade disputes within global frameworks and commitments.
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The content is provided by Avery Redwood, Front Signals
