Summary
The European Union (EU) is set to announce a new round of tariff countermeasures against the United States (US) in response to expanded US tariffs introduced in early 2025, marking a critical escalation in transatlantic trade tensions. These measures come amid ongoing disputes over trade imbalances, sector-specific protections, and compliance with World Trade Organization (WTO) rulings, particularly relating to aerospace subsidies and reciprocal tariffs imposed by the US on key EU exports such as automobiles, steel, aluminum, semiconductors, and pharmaceuticals. The EU’s planned tariffs, targeting approximately €18 billion ($19 billion) in US goods including agricultural products, industrial machinery, and iconic items like Bourbon whiskey and Boeing aircraft, are designed to be proportionate responses under the EU’s legal framework to offset economic harm caused by US measures.
This latest development follows a history of tit-for-tat tariff impositions between the two economic powers, which has raised concerns over potential disruption to nearly $1 trillion in annual trade and the risk of broader global economic destabilization. The EU’s strategic approach combines the deployment of commercial countermeasures with legal action at the WTO and the innovative use of the recently adopted Anti-Coercion Instrument (ACI), allowing the bloc to respond to economic pressure even when WTO rules are not explicitly violated. While the EU insists its countermeasures are calibrated to protect its economic interests and ensure fair competition, it simultaneously emphasizes a willingness to negotiate a balanced resolution to avoid prolonged trade conflict.
The decision-making process for these countermeasures involves consultation with EU Member States and stakeholders, followed by adoption through the Council of the European Union, often by qualified majority vote, reflecting a coordinated and legally grounded response under the Enforcement Regulation (EU No 654/2014). However, the proposed tariffs have sparked political and economic concerns, particularly among US producers in sectors such as agriculture and automotive, where the impact may exacerbate existing challenges including competitive pressures and supply chain disruptions.
As the EU prepares to formalize its new tariff list, the situation underscores the complex interplay of international trade law, geopolitics, and economic strategy shaping transatlantic relations. The unfolding dispute highlights not only the risks of escalating protectionism but also the efforts by both sides to manage conflict through a mix of legal instruments, diplomacy, and targeted economic measures.
Background
Tensions between the European Union (EU) and the United States (US) regarding tariffs have escalated significantly in recent years, prompting concerns over a potential trade war reminiscent of the 1930s. The conflict intensified following the US government’s introduction of “reciprocal tariffs” in April 2025, which were widely criticized by the EU as unjustified and damaging to transatlantic trade relations. These tariffs, including a standard 20% duty on various goods, were imposed under a methodology the EU described as absurd and threatening to destabilize the global economy by potentially driving it into stagflation.
The tariff dispute partly stems from long-standing disagreements over trade imbalances and specific sectoral protections. For instance, Washington State’s enactment of Senate Bill 6690, which raised aerospace business and occupation tax rates to comply with World Trade Organization (WTO) rules, was seen as an attempt by the US to address a previous illegal measure, although negotiations over fair competition continue. The US tariffs primarily target key EU export sectors such as automobiles, aluminum and steel, semiconductors, lumber, and pharmaceuticals, which are considered critical to US economic interests.
In response, the EU has taken a firm stance by imposing retaliatory tariffs on $23.8 billion worth of US goods, emphasizing that the US tariffs were “unjustified and damaging”. EU officials have highlighted that average EU tariffs on US exports remain relatively low (around 1.2%), while US tariffs on EU imports average slightly higher at 1.4%. The EU’s strategic response includes not only commercial countermeasures but also potential legal actions through the WTO, as well as the deployment of newer tools such as the Anti-Coercion Instrument (ACI), which enables the EU to counteract economic coercion by third countries even when WTO rules are not explicitly violated.
The Enforcement Regulation, a longstanding legal framework, provides the EU with the authority to suspend or withdraw concessions granted under international trade agreements as a form of retaliation. The EU considers the US tariff measures as safeguard measures, which under WTO rules justify countermeasures, and is currently preparing to implement targeted tariffs on selected US products, including cars and other goods subject to the US’s “reciprocal” tariffs. This ongoing dispute remains a priority on the EU agenda, with trade between the two blocs reaching nearly $1 trillion in 2024, underscoring the high stakes involved.
European leaders, including Commission President Ursula von der Leyen, have issued statements emphasizing the need for a balanced response that combines firm countermeasures with ongoing negotiations to restore fair competition and maintain transatlantic economic stability. The EU’s approach seeks to mitigate uncertainty for businesses and avoid long-term disruption to supply chains, while maintaining pressure on the US to revise its tariff policies. As negotiations continue, the EU is set to reveal its new countermeasures this Thursday, signaling a critical juncture in transatlantic trade relations.
Details of the New EU Tariff Countermeasures
The European Union (EU) is preparing to implement a new set of tariff countermeasures targeting United States (US) exports in response to the expanded US tariffs announced in early 2025. These countermeasures are designed to match the economic scope and breadth of the US tariffs, aiming to protect the EU’s trade interests while maintaining a stance open to negotiation for a “fair and balanced negotiated outcome”.
Scope and Economic Value
The new countermeasures will target approximately €18 billion worth of US goods, adding to existing measures related to previous US tariffs on steel and aluminium imports. Collectively, the EU measures could affect US exports valued up to €26 billion, aligning with the increased impact of the US tariffs on EU exports. This approach follows a proportional retaliation strategy whereby the EU intends to calibrate its response to the scale of harm caused by the US trade actions.
Process and Legal Basis
The process for imposing these countermeasures adheres to the comitology procedure, requiring the endorsement of EU Member States before formal adoption. The European Commission launched a two-week consultation with stakeholders to gather input on the potential measures, which concluded by late March 2025. Following this, the Commission finalized its implementing draft, defining the scope and products to be targeted, before consulting Member States. The legal foundation for these measures is the Enforcement Regulation (EU No 654/2014), which permits the EU to suspend concessions or impose safeguard measures in response to third-country actions deemed unfair or harmful.
Targeted Products and Sectors
While the full list of targeted US products was pending official publication at the time of the announcement, draft lists indicated that agri-food products such as processed fruits, nuts, vegetables, poultry, and fruit would be included. Additionally, industrial products like motorcycles, electrical equipment, automotive parts, engines, and machinery are expected to face tariffs. Notably, key American products such as Boeing aircraft and Bourbon whiskey are among the proposed targets. The EU has also considered broader measures, potentially including retaliation in services trade, which could affect sectors where the US holds a trade surplus with the EU.
Strategic Considerations
European officials emphasized that these countermeasures could be suspended if the US agrees to negotiate a balanced resolution. The EU’s approach combines readiness to impose proportionate tariffs with an openness to dialogue, aiming to avoid prolonged trade tensions that could harm both economies and contribute to global economic stagnation. The Commission’s measures also reflect lessons from previous WTO disputes and safeguard cases, carefully aligning with international trade rules while protecting EU economic interests. In addition to tariffs, the EU is reportedly exploring the use of an ‘anti-coercion’ instrument adopted in 2023, which could impose restrictions related to business licenses and intellectual property rights as part of its broader trade defense toolkit.
EU Decision-Making and Approval Process
Decisions regarding the adoption, renewal, or lifting of sanctions and countermeasures within the European Union are primarily taken by the Council of the European Union based on proposals from the High Representative of the Union for Foreign Affairs and Security Policy. The European Commission, in cooperation with the High Representative, jointly submits sanctions proposals to the Council for unanimous adoption. Specifically, the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) prepares the necessary regulatory proposals and represents the Commission in discussions with Member States at the Council Working Party of Foreign Relations Counsellors.
The Council is expected to act “expeditiously,” usually within eight weeks after receiving the Commission’s proposal, although this period can be extended. Unlike some decisions requiring unanimity, the adoption of implementing acts related to countermeasures may be made by qualified majority voting, meaning no single Member State can veto the decision. Following the Council’s acceptance of such measures, the Commission has up to six months to engage with the affected third country through diplomacy, mediation, or international adjudication, if necessary.
The EU employs a consultative approach with stakeholders and Member States throughout the process. Stakeholders are invited to submit their views during public consultations, as exemplified in the recent consultation under Article 9 of Regulation (EU) No 654/2014 on US steel and aluminium measures. This input is consolidated and assessed by the Commission, which then finalizes its draft implementing act outlining the proposed countermeasures and their product scope. The draft is subsequently presented to Member States for endorsement through the comitology examination procedure as per Article 5 of Regulation (EU) No 182/2011. Member States vote on the proposals by qualified majority, and once approved, the act imposing countermeasures enters into force, typically by mid-April in recent cases.
The Enforcement Regulation often serves as the legal basis for the EU’s countermeasures against US tariffs, particularly when these are considered “safeguard measures.” This regulation allows the Commission to prioritize minimizing negative impacts on the EU economy when selecting response measures and enables businesses to advocate for exemptions. The procedural framework under the Enforcement Regulation offers speed and predictability since it has been employed in prior trade disputes.
Impact and Reactions
The proposed EU countermeasures against US tariffs are expected to have significant economic and political repercussions. The EU duties are set to affect up to $13.5 billion worth of exports from predominantly Republican states, with soybeans identified as the top target due to their economic and symbolic importance in the US heartlands. The tariffs on soybeans come amid existing challenges from China’s retaliatory measures, increased global competition, and falling prices, placing additional strain on the sector. In the automotive industry, the US is the second-largest market for EU vehicle exports, accounting for 22 percent of the EU’s vehicle export market in 2024. US automakers such as General Motors, Ford, and Stellantis face high costs due to tariffs on imported vehicle parts, averaging $4,911 per vehicle, surpassing the overall industry average of $4,239 per vehicle.
From the EU perspective, these retaliatory tariffs could disrupt supply chains, increase costs, and create uncertainty for companies, potentially delaying investments and dampening economic growth. However, the EU also views these measures as a strategic response to the US’s tariff regime, which has generated tens of billions of dollars in revenue annually and aims to reduce the longstanding trade imbalance by encouraging local sourcing and reshoring production in the United States. The EU’s approach includes proportionate and scalable retaliation, possibly extending to services and leveraging the newly adopted EU Anti-Coercion Instrument (ACI), a framework designed to escalate responses to external economic pressure flexibly.
Political reactions within the EU reveal a focus on rebalancing trade relations rather than escalating into a full trade war. EU officials have emphasized that their response is intended to achieve a rebalancing of concessions with the US, rather than retaliation per se, signaling openness to negotiation. The legal basis for the countermeasures is grounded in WTO rules and EU regulations, with the European Commission consulting member states to finalize the scope and level of countermeasures. While these actions seek to address economic harm caused by US tariffs on EU steel, aluminium, and other exports, the EU recognizes the interconnectedness of the global economy and the risks associated with prolonged trade tensions, including potential disruption to mutual investment and business revenues.
International Trade Implications
The introduction of new U.S. tariffs aims to generate tens of billions of dollars in annual revenue and address the persistent trade imbalance between the United States and Europe by promoting local sourcing and reshoring production. Additionally, these tariffs seek to ensure that foreign producers contribute fairly to the American economy. In response, the European Union has prepared its first set of countermeasures against U.S. tariffs, including proposed retaliatory levies on products such as motorcycles, poultry, and fruit imports. This move follows similar actions by China and Canada, contributing to an escalating trade conflict with potential global ramifications.
The intertwined nature of the global economy means these tariffs risk disrupting supply chains for many EU firms, making it more difficult and costly to source certain products. This uncertainty could lead companies to delay investments, thereby dampening economic growth within the bloc. Conversely, the imposition of tariffs may encourage countries to strengthen trade ties with the EU as a counterbalance to the U.S.’s protectionist measures. The European Commission has been actively consulting on possible countermeasures and preparing litigation at the World Trade Organization (WTO) to challenge the U.S. tariffs, underscoring the legal and diplomatic dimensions of this dispute.
The broader context includes prior WTO rulings related to the large civil aircraft dispute, under which the United States was authorized to impose tariffs on $7.5 billion worth of EU goods annually due to subsidies provided to European aerospace manufacturers. Compliance efforts, such as adjustments to state-level taxes in Washington State, have been undertaken by the U.S. to align with WTO rules, yet authorized countermeasures remain in place until the harm is fully addressed. Furthermore, the tariff actions by the U.S. are part of a complex framework involving multiple trade policies and executive orders aimed at addressing issues ranging from intellectual property and technology transfer to illicit drug trafficking and reciprocal tariff adjustments in response to foreign retaliation.
Recent developments have seen the U.S. and EU reach a preliminary trade framework agreement that includes lowered tariffs on several goods, albeit with conditions imposed by the U.S. administration before some tariff reductions take effect. Given these evolving circumstances, businesses are advised to closely monitor these tariff developments to understand their impacts on supply chains and comply with regulations such as Regulation (EU) 2023/2675, which protects the Union and its member states from economic coercion by third countries.
Future Outlook
The European Union is poised to announce a new set of tariff countermeasures against the United States, reflecting escalating trade tensions and the ongoing efforts to address disputes such as the WTO large civil aircraft case and various U.S. trade actions. These forthcoming measures are expected to be more targeted, focusing on a smaller volume of U.S. imports, including products like motorcycles, poultry, fruit, and wood. The EU’s approach emphasizes proportionality and scalability, potentially extending beyond goods to include services, intellectual property rights, and business licenses under the recently adopted Anti-Coercion Instrument (ACI).
Despite preparations for these countermeasures, the European Commission and key EU officials, including Commission President Ursula von der Leyen and French Trade Minister Laurent Saint-Martin, continue to advocate for negotiated outcomes that yield balanced and mutually beneficial trade agreements with the United States. This preference for diplomacy reflects concerns about the broader economic impact of tariff escalations, such as supply chain disruptions, increased costs for EU businesses, and potential delays in investment and economic growth. The EU remains committed to engaging with the U.S. to resolve disputes while retaining the flexibility to deploy its full range of legal instruments if necessary.
The ACI represents a significant evolution in the EU’s trade policy toolkit, enabling the Union to respond to economic coercion by third countries even when such actions do not breach WTO rules. This instrument is intended as a deterrent, providing the EU with a more flexible and comprehensive framework to protect its economic interests and sovereignty in the face of
The content is provided by Jordan Fields, Front Signals
