Summary
The European Union (EU) is poised to unveil a significant new package of countermeasures this Thursday in response to the United States’ expanded tariff measures targeting EU steel, aluminum, automobiles, and other goods. These US tariffs, imposed under Section 232 of the Trade Expansion Act of 1962, have escalated since March 2025, with duties reaching up to 25% on a wide range of European exports valued at approximately €26 billion. The EU’s forthcoming actions, expected to target around €18 billion of American products including motorcycles, poultry, fruit, and wood, form part of a broader strategy to recalibrate trade relations and press for a more balanced and reciprocal economic partnership across the Atlantic.
The EU’s response reflects a carefully calibrated approach designed to maintain pressure on the US while preserving avenues for negotiation. Rooted in the Enforcement Regulation, the package includes phased tariffs alongside potential broader measures such as restricting US companies’ access to EU public procurement and services markets, particularly in sectors like finance and technology. The bloc emphasizes that retaliation is proportionate and reversible, aiming to avoid a full-scale trade war while defending the interests of European businesses and consumers amid rising trade tensions.
This tariff dispute highlights longstanding imbalances in transatlantic trade, including the US’s higher tariff rates on EU goods compared to the EU’s relatively low average tariffs on US products. Economic analyses estimate that ongoing US tariffs could reduce EU exports by hundreds of billions of dollars, disrupting integrated supply chains vital to both economies and potentially inflating costs for consumers on both sides. The EU’s methodical decision-making process, involving extensive consultation among member states and institutions, contrasts with the US’s more unilateral tariff impositions, underscoring the complexity of EU trade governance.
While the EU remains committed to dialogue and negotiation, key officials have affirmed readiness to escalate retaliatory measures if necessary, including deploying newly adopted “anti-coercion” tools that extend beyond tariffs to target business licenses and intellectual property rights. The unfolding dispute has significant implications for global trade dynamics, with potential shifts in supply chains and alliances as both sides seek to protect their economic interests amid a contentious and evolving transatlantic trade environment.
Background
In response to the United States imposing tariffs of up to 25% on imports of steel, aluminium, and certain related products from the European Union (EU) and other trading partners on 12 March 2025, the EU prepared to introduce countermeasures aimed at rebalancing trade relations. These US tariffs, enacted under Section 232 of the Trade Expansion Act of 1962, targeted a broad range of EU exports, including steel pipes, wire, and tin foil, escalating from earlier measures that initially set aluminium tariffs at 10% before increasing them to 25%. The US further committed to ensuring that tariff rates on pharmaceuticals, semiconductors, and lumber originating from the EU would not exceed 15%, while also agreeing to reduce tariffs on automobiles and automobile parts contingent on legislative proposals from the EU.
The EU’s response has been calibrated to incentivize negotiations with the US rather than to serve as punitive retaliation. Officials emphasized a desire to negotiate from a position of strength and fairness, aiming for potentially lower and more balanced tariffs on both sides of the Atlantic. However, EU counter-tariffs are limited by the smaller range of US goods exposed compared to EU exports affected by US tariffs. For instance, EU retaliation initially focused primarily on steel and aluminium-related US imports, including motorcycles, poultry, fruit, wood, clothing, and dental floss, with the total value of targeted goods around €21 billion, somewhat less than the €26 billion worth of EU metals exports hit by US tariffs.
Economic analyses highlighted the substantial impact of the tariffs on trade flows. A report by Frontier Economics estimated that a blanket 20% tariff would reduce EU goods exports by $209 billion, with slight gains anticipated in services exports. The EU also noted an imbalance in tariff application: while the EU levied an average tariff of about 1% on US goods, the US collected approximately €7 billion in tariffs on EU products in 2023, compared to the EU’s €3 billion on US goods. This asymmetry has added to the complexity of the trade dispute.
The imposition of tariffs threatens to disrupt the integrated single market and supply chains critical to the EU economy, potentially raising costs for businesses and consumers alike. The EU’s single market facilitates lower costs, broader market access, and higher safety standards for products and services, all of which could be undermined by escalating trade barriers. Moreover, retaliatory tariffs risk pushing affected countries to divert exports to the EU market, increasing competition for EU firms and potentially destabilizing established trade patterns.
Given these tensions, the EU’s strategic approach combines readiness to implement countermeasures with a willingness to negotiate a more balanced, reciprocal trade relationship. This approach seeks to preserve the benefits of open and rules-based international trade while addressing the challenges posed by unilateral US tariff actions.
Announcement of New EU Measures
In response to the latest U.S. tariffs, the European Union is preparing to announce a new package of countermeasures this Thursday. These measures will build upon the EU’s existing Enforcement Regulation framework, which allows the Union to suspend or withdraw concessions under international trade agreements when third countries breach trade rules that harm EU commercial interests. The forthcoming EU response is expected to target approximately €18 billion worth of American goods, including motorcycles, poultry, fruit, and wood.
The European Commission has emphasized that while the retaliation will be firm and proportionate, the bloc retains flexibility to pursue negotiations with the U.S. administration to achieve a balanced and mutually beneficial trade agreement. Both the Commission and key officials, including French Trade Minister Laurent Saint-Martin, have reiterated the preference for dialogue over escalation, warning that a tariff war would be harmful to all parties involved. The EU’s approach will also potentially include broader countermeasures beyond goods tariffs, such as restricting U.S. companies’ access to EU public procurement tenders and services markets in sectors like finance and technology.
The timing of the EU’s response is closely linked to the implementation schedule of U.S. tariffs. The EU plans to implement its measures gradually, with initial actions taking effect soon after the announcement and further rounds scheduled for later in the year. The Commission is also awaiting the exact details of U.S. reciprocal tariffs, which are set to take effect imminently, before finalizing its countermeasures. According to Commission spokesperson Olof Gill, the EU aims to deliver a well-calibrated and timely response to the U.S.’s actions, though the precise timing remains contingent on U.S. developments.
This calibrated retaliation reflects the EU’s commitment to uphold fair trade principles while navigating the complex multilateral trade environment. It also underscores the EU’s broader strategy to leverage the Enforcement Regulation’s tools, including potential adjustments in trade in services and public procurement policies, to protect the Union’s economic interests from coercive practices by third countries. The European Commission has engaged in consultations with member states and stakeholders to refine the list of countermeasures, balancing the need for a robust response with the necessity of maintaining transatlantic trade relations.
Details of the Proposed EU Actions
The European Union’s proposed response to the United States’ recent tariff measures involves a carefully calibrated package of retaliatory actions aimed at addressing the tariffs on steel, aluminum, cars, and other broad-based duties imposed by the U.S. administration. These proposals, first published by the European Commission and adopted in a Brussels meeting, include the reimposition of previously suspended rebalancing measures alongside new tariffs targeting a broad range of American goods.
The initial phase of the EU’s retaliation is designed to be staggered, with tariffs gradually taking effect starting mid-April, continuing through May, and concluding by December. The first list of targeted products reportedly includes American motorcycles, poultry, fruit, and wood, with a second wave of measures expected to focus on U.S. car tariffs and reciprocal duties. Notably, the EU aims to keep some flexibility in its approach, signaling willingness to adjust measures as negotiations with the United States progress.
A key feature of the EU’s strategy is its intent to use the Enforcement Regulation as the legal basis for these actions, which allows suspension or withdrawal of concessions under international trade agreements in response to breaches affecting EU commercial interests. Additionally, the EU is considering the deployment of an “anti-coercion” tool adopted in 2023, which could impact U.S. business licenses and intellectual property rights, thereby extending the scope of retaliation beyond tariffs alone.
While the measures are structured to inflict economic pressure on the U.S., European officials have emphasized that the overarching goal remains the promotion of negotiations to achieve a balanced and mutually beneficial trade agreement. The EU’s trade commissioner, Maroš Šefčovič, underscored the importance of maintaining a flexible and phased response, allowing space for diplomatic engagement before escalating tensions further.
In parallel, discussions are underway within EU member states to finalize the details of these retaliatory lists, with a public announcement expected at the start of the week following the initial Brussels meeting. The EU has indicated that the response will extend beyond goods, potentially targeting the U.S. trade surplus in services, especially digital services, which could see additional tariffs or other trade barriers implemented at the end of April or later.
Despite the escalating tariff measures, some U.S. products are notably excluded from the EU’s list, such as Bourbon whiskey, reflecting a strategic and calculated selection process intended to balance retaliation with the minimization of adverse effects on certain sectors. The EU’s measured approach reflects both the economic stakes involved and the desire to avoid a full-scale trade war, leaving open the prospect of a negotiated resolution.
EU Decision-Making and Implementation Process
The European Union’s response to trade disputes, including the imposition of counter-tariffs, involves a complex and multi-layered decision-making process that reflects its supranational structure and the need for consensus among its member states. Unlike unilateral actions taken by other global actors, such as China, which can rapidly change tariff rates without extensive procedural constraints, the EU must navigate a coordinated process involving multiple institutions and member states.
The process begins with the European Commission, the EU’s politically independent executive arm responsible for proposing new legislation and implementing policies. The Commission prepares proposals for trade measures, including retaliation lists, based on its mandate to promote the general interest of the EU and to enforce EU law. It coordinates trade policy on behalf of all 27 member countries and initiates public consultations to gather input from EU members and businesses before finalizing any counter-tariff measures.
Following the Commission’s proposal, member states review and often trim the list of potential retaliatory actions to build consensus, reflecting the requirement that the EU acts collectively in trade matters. This step ensures that measures are balanced and not overly disruptive to transatlantic trade. The final proposals are then subject to approval by both the Council of the European Union and the European Parliament. The Council represents the governments of member states and must approve trade agreements by qualified majority voting, while the Parliament acts as co-legislator and must consent to agreements, especially after the Treaty of Lisbon granted it a more active role in trade and investment matters.
Once both institutions approve the proposals, the EU can implement the trade measures. In cases where agreements involve competencies of individual member states, these states may need to ratify agreements nationally before full implementation. The legal basis for imposing countermeasures often relies on specific regulations, such as the Enforcement Regulation, which sets out procedures for the EU to suspend or withdraw concessions under international trade agreements to effectively respond to unfair trade practices.
The EU’s deliberate and consultative approach contrasts with more rapid tariff changes by other countries, aiming to balance assertive trade defense with maintaining open and fair international trade relations. This process also allows time for diplomatic efforts, such as ongoing negotiations with the United States to avoid escalating trade conflicts, underscoring the EU’s preference for resolving disputes through dialogue where possible.
Reactions and Responses
The European Union’s reaction to the United States’ recent tariff measures has been characterized by a combination of strategic negotiation, measured retaliation, and preparation for potential escalation. In response to sweeping trade actions taken by the US—including tariffs on steel, aluminum, and automobiles, as well as a series of Executive Orders addressing various trade and security concerns—the EU has adopted a twofold approach: offering the possibility of negotiated wins while simultaneously preparing a comprehensive list of retaliatory tariffs targeting American products.
EU officials have indicated that initial countermeasures will focus primarily on American goods such as steel and aluminum, with two lists of targeted US products planned to come into effect by mid-April. These measures are designed to correspond with the US’s own reciprocal tariffs and the newly announced car levies, reflecting a deliberate and methodical response process that involves consultation with member states before final decisions are made. However, Brussels has signaled that the response will likely extend beyond goods tariffs. There is consideration of broader countermeasures, including potential limitations on US companies’ access to EU public procurement tenders and services markets—spanning sectors from financial services to technology—and the deployment of an “anti-coercion” tool adopted in 2023, which could impact business licenses and intellectual property rights.
The EU’s stance emphasizes negotiation as a primary objective, aiming to avoid a protracted trade conflict while maintaining readiness to retaliate decisively if necessary. Key European voices have underscored this dual posture: Bernd Lange, chair of the European Parliament’s international trade committee, noted the inevitability of reaction following action, highlighting that tariffs imposed by the US effectively raise costs for American consumers and businesses, fueling inflation. Sophie Wilmès, vice-chair of the Parliament’s delegation for relations with the US, described dissuasion as the EU’s first line of defense but affirmed Europe’s capability to resist and protect critical sectors should retaliation become necessary.
The complex nature of EU decision-making, involving consensus among 27 member states and adherence to established regulatory procedures, ensures that any retaliation is carefully calibrated. While the European Commission has prepared a substantial retaliation list, it is expected that member states will influence the final scope of measures. Additionally, the EU may consider targeting the US’s significant trade surplus in services—amounting to €109 billion in 2023—which has not yet been directly addressed in current tariff lists.
Further complicating the trade landscape is the potential for companies to circumvent tariffs by relocating production. The EU has indicated it may apply strict origin determination rules, such as the “major portion rule,” to classify goods as US-originated if most parts originate in the US, thereby subjecting them to tariffs despite third-country assembly. This approach demands that companies provide economic justification for production shifts to avoid penalties.
The wider implications of the tariff dispute also extend to global trade dynamics. The US’s imposition of tariffs risks pushing affected countries to deepen trade ties with the EU as a counterbalance, potentially benefiting the European single market, which already maintains 44 agreements with over 70 countries and regions. While retaliatory tariffs could raise costs for consumers on both sides, EU officials maintain that the bloc’s diversified trade relations provide resilience and bargaining power.
Despite tensions, the EU and the US continue to commit to cooperation in areas such as technical standards development, conformity assessments, and addressing non-tariff barriers in sectors including food and agriculture. Negotiations on rules of origin and cooperation on securing supply chains in steel and aluminum reflect ongoing efforts to stabilize transatlantic trade relations amid the tariff conflict.
Analysis and Commentary
The European Union’s approach to countering US tariff measures reflects a careful balancing act between deterrence and diplomacy. While the EU has expressed reluctance to retaliate aggressively, it has prepared a robust contingency plan targeting approximately €100 billion worth of US goods should the United States escalate tariffs to 20 percent, particularly in the automotive sector. This measured stance underscores the EU’s preference for negotiation as the initial response to trade tensions, emphasizing dialogue over confrontation.
Public opinion within the EU appears largely supportive of retaliatory measures if deemed necessary, with surveys indicating majority backing across several member states. The EU’s consultation process, involving member states and industry stakeholders, aims to select products for counter-tariffs that minimize harm to the
Timeline
The escalation of trade tensions between the European Union and the United States has unfolded through a series of significant events and tariff implementations. On October 8, 2021, over 135 countries participating in the OECD negotiations agreed on a two-pillar approach to reform and withdraw digital services taxes (DSTs), known as the “Global tax deal.” While the initial deadline for Pillar One was December 31, 2023, it was later extended to December 31, 2024, allowing for prolonged international coordination efforts.
Retaliatory measures by the EU in response to U.S. tariffs began to take shape as early as April 2023, with the European Commission setting EU tariffs to come into force between April 15 and December 1. These tariffs served as the EU’s first countermeasures against the U.S. trade war, which included 25% customs duties on EU cars and 20% “reciprocal” tariffs on all EU imports. The timing of these measures was also adjusted to allow for ongoing negotiations with the U.S..
On March 12, 2025, new U.S. tariffs came into effect, significantly broadening the scope and value of affected European trade. In response, the EU’s suspension of earlier countermeasures lapsed on March 31, 2025, with additional duties applying to goods customs cleared into the EU from April 1, 2025, onward. The European Commission immediately launched the process to impose further countermeasures on the U.S..
Following the activation of these tariffs, EU officials were expected to announce a detailed response plan as early as the week following March 2025. This plan aimed to address both the car levies and the 20% tariffs through consultation with member states and a subsequent vote. European policymakers emphasized a flexible and methodical approach to retaliation, keeping all options on the table, including the possibility of further measures.
The European Commission formally published proposals for these countermeasures in Brussels shortly after the U.S. tariffs took effect. These proposals were adopted swiftly to coordinate the EU’s trade policy and demonstrate resolve in the face of escalating tariffs.
Throughout this period, EU trade chief Maroš Šefčovič highlighted the necessity of maintaining flexibility to calibrate the EU’s response in accordance with developments. The initial rebalancing approach was designed to reinstate previously suspended measures automatically once their suspension expired, thereby ensuring a robust and timely reaction.
The information regarding these retaliatory trade measures remains subject to ongoing updates and refinements, with customs authorities in respective countries determining the final classification and assessment of duties as of September 2025.
The content is provided by Avery Redwood, Front Signals
