Summary
The European Union is set to announce its next series of retaliatory measures in response to recent tariffs imposed by the United States, marking a new phase in the ongoing transatlantic trade tensions. These tariffs, originally initiated by the U.S. under Section 232 of the Trade Expansion Act and later expanded through a statutory review increasing duties on key sectors such as semiconductors and electric vehicles, have prompted the EU to prepare targeted countermeasures affecting a broad range of American goods including motorcycles, poultry, and wood. The upcoming announcement, expected to be revealed this Thursday, will outline a phased implementation of these tariffs alongside consideration of broader actions aimed at U.S. services and intellectual property rights under the EU’s recently adopted Anti-Coercion Instrument (ACI).
The dispute reflects a broader geopolitical and economic contest, with the EU seeking to protect its industries and maintain fair market access while avoiding escalation into a full-scale trade war. Notably, the EU’s response strategy balances calibrated tariff retaliation with ongoing diplomatic efforts to negotiate a mutually beneficial agreement, amid complex legal challenges regarding the WTO-compliance of imposed measures. The EU’s deployment of the ACI and its emphasis on legal and regulatory frameworks underscore a strategic shift toward more flexible and targeted trade defenses, reflecting lessons learned from previous disputes over the legality of U.S. tariffs and the limitations of WTO enforcement mechanisms.
The potential economic impact of these measures is significant, affecting bilateral trade valued at over €1.5 trillion annually and involving key sectors such as agriculture, automotive, and aerospace. The tariffs risk disrupting global supply chains and increasing costs for businesses on both sides of the Atlantic, while EU member states remain divided on the scope and intensity of retaliatory steps, reflecting internal political dynamics and strategic calculations. At the same time, the EU continues to engage with the WTO dispute settlement system to affirm its commitment to international trade rules, even as the body’s adjudicative effectiveness remains constrained.
This evolving situation underscores the complex interplay of economic interests, legal considerations, and geopolitical factors shaping EU-U.S. trade relations. As the EU finalizes its response, all options remain open, including further escalation or negotiated compromise, with significant implications for transatlantic trade, global markets, and international trade governance.
Background
In recent years, escalating trade tensions between the United States and the European Union have led to the imposition of multiple rounds of tariffs and retaliatory measures. The initial U.S. tariffs, including the 25% duties on steel and aluminum imports announced in March 2018 under Section 232 of the Trade Expansion Act, significantly impacted EU industries and triggered a strong response from Brussels. These measures were part of a broader U.S. strategy to address what it described as large and persistent trade deficits, which were framed as a national security threat in Executive Order 14257 issued in April 2025.
The EU’s response has been measured but firm, targeting U.S. exports such as soybeans, meats, bourbon whiskey, sewing machines, airplane parts, and car components with retaliatory tariffs designed to exert pressure on key American industries, including major companies like Boeing. The EU carefully calibrated its retaliatory list, with some products removed after lobbying efforts, such as the exclusion of bourbon whiskey following U.S. threats of countermeasures.
Throughout the dispute, the EU has sought to ensure its countermeasures comply with World Trade Organization (WTO) rules, avoiding measures that could be construed as illegal safeguards. While the EU initially invoked Regulation (EU) No 654/2014 to justify its tariffs as rebalancing measures in response to U.S. Section 232 tariffs, subsequent WTO panel rulings questioned the legality of such classifications, casting uncertainty on the EU’s legal basis for retaliation.
In May 2024, the Biden administration conducted a statutory review of Section 301 tariffs, deciding to retain them and increase rates on approximately $18 billion worth of goods, including semiconductors, electric vehicles, and critical raw materials, with some new duties phased in through 2026. These changes are expected to add an estimated $3.6 billion in additional taxes based on 2023 import values.
EU trade ministers have been actively engaged in formulating the next steps, with consultations and votes planned to approve further retaliatory tariffs, especially in response to U.S. tariffs on cars and other goods. Discussions also include potential targeting of U.S. service trade surpluses and the deployment of an ‘anti-coercion’ tool adopted by the EU in 2023, which could impact business licenses and intellectual property rights. The ongoing tit-for-tat tariff measures risk disrupting global supply chains and creating uncertainty for businesses on both sides of the Atlantic.
As the EU prepares to reveal its next moves in response to the latest U.S. tariffs, the situation remains dynamic, with all options reportedly on the table to avoid a full-blown trade war while defending the bloc’s economic interests.
Legal and Regulatory Framework
The European Union’s response to U.S. tariffs is governed primarily by a set of legal instruments and regulatory frameworks designed to enable measured and lawful countermeasures. Central among these is the Enforcement Regulation, which allows the EU to rebalance concessions or other obligations under Article 8 of the WTO Agreement on Safeguards. This regulation empowers the EU to take appropriate commercial policy measures—including the suspension of tariff concessions or the imposition of new or increased customs duties—based on objective criteria to safeguard the EU’s interests.
Complementing the Enforcement Regulation is the recently adopted Anti-Coercion Instrument (ACI), which provides the EU with a structured process to counteract arbitrary trade practices that amount to coercion by third countries. The ACI combines retaliation, litigation, and diplomacy to address such challenges. Given the broad spectrum of potential retaliatory measures under the ACI, companies must prepare for varied market impacts such as price fluctuations, supply chain disruptions, and restrictions on market access. Measures under the ACI must be carefully designed to comply with WTO rules, implying they should be temporary, applied non-discriminatorily (erga omnes), and avoid undue harm to EU businesses dependent on imports of affected goods.
Historically, the EU has relied on Regulation (EU) No 654/2014 as a legal basis for imposing rebalancing measures. This regulation was notably invoked during the first Trump administration in response to U.S. Section 232 tariffs, which the EU argued qualified as safeguard measures justifying retaliatory tariffs. However, several WTO panels subsequently found that those U.S. tariffs did not meet the criteria for safeguards, a finding appealed to the currently non-operational WTO Appellate Body. These rulings cast doubt on the continued appropriateness of Regulation (EU) No 654/2014 as the sole legal foundation for retaliatory tariffs, potentially pushing the EU toward greater reliance on newer instruments like the ACI.
The implementation of EU trade policy, including these regulatory tools, operates under the Ordinary Legislative Procedure, which has progressively empowered the European Parliament in trade decision-making. This procedure ensures democratic oversight and legitimizes the EU’s Common Commercial Policy.
In addition to regulatory measures, the EU has the option to activate the WTO dispute settlement system to challenge unfair trade practices. While such WTO complaints serve as a reaffirmation of the EU’s commitment to international law, their practical impact is often limited in the short term due to the lengthy adjudication process and the current dysfunction of the WTO Appellate Body. Furthermore, WTO arbitration decisions have sometimes constrained the EU’s ability to impose countermeasures, as seen in the rejection of EU requests related to U.S. subsidies for NASA and Department of Defense research and development programs.
Looking ahead, the EU is considering broadening its toolkit to include more extensive “anti-coercion” measures that could target U.S. services or restrict access to public tenders, particularly if negotiations fail to yield a resolution. Such measures reflect an evolution in EU trade defense strategy, emphasizing deterrence and a calibrated response to coercive trade practices without escalating into a full-scale trade war.
Details of the Upcoming EU Announcement
The European Union is expected to reveal precise details of its next wave of tariffs targeting American goods as early as this Thursday, following a series of escalating trade tensions with the United States. According to a draft copy of the proposed measures seen by Reuters, the tariffs are likely to focus on American motorcycles, poultry, fruit, and wood, among other products. These countermeasures, if implemented, would be phased in gradually, beginning next Tuesday, with additional rounds planned for May and December.
This announcement comes after the EU adopted an initial set of tariffs in response to U.S. steel and aluminum duties that took effect in March, which targeted nearly all European goods with a 20% tariff. While the EU has shown a readiness to impose retaliatory tariffs, it has also emphasized a preference for negotiation with the Trump administration to achieve a balanced and mutually beneficial trade agreement. The European Commission, responsible for coordinating the bloc’s trade policy, has been methodically preparing these measures, consulting with member states, and maintaining flexibility for further action depending on developments.
Delays in the timeline for imposing some countermeasures have been announced, including a postponement until August 6 to allow additional time for negotiations between the EU and the U.S.. Nevertheless, the EU has indicated that if talks do not yield satisfactory results, the prepared countermeasures will be enforced, and further retaliatory options remain under consideration. Among these potential measures, some member states are contemplating broader “anti-coercion” tactics that could include targeting U.S. services or restricting access to public procurement opportunities.
The forthcoming announcement is expected to finalize a first package of tariffs estimated to affect up to €26 billion ($28.4 billion) worth of U.S. goods, reflecting the EU’s ongoing efforts to protect its economic interests and companies amid the escalating trade dispute. This strategy underscores the EU’s dual approach of combining calibrated retaliatory measures with ongoing diplomatic engagement to resolve the trade conflict.
Specific Retaliatory Measures Under Consideration
The European Union (EU) is preparing a range of retaliatory measures in response to the United States’ tariffs on steel, aluminium, and other products. Following consultations among EU member states, the European Commission, and industry representatives, the EU has proposed imposing tariffs of up to 25% on a broad spectrum of U.S. exports valued at approximately €22.1 billion, based on 2024 import figures. The targeted products include agricultural commodities such as soybeans, meat, and tobacco, as well as industrial goods like iron, steel, aluminium, sewing machines, airplane parts, and car components.
The EU’s strategy involves “smart tariffs” designed to maximize political and economic impact by focusing on products linked to Republican-voting states and those strongly associated with the United States, such as bourbon whiskey. The aircraft and automotive sectors represent particularly valuable targets, with U.S. planes worth about €10.5 billion sold to EU airlines and leasing companies in 2024. However, the EU has indicated that it may avoid exact mirror tariffs on sectors like automotive, which already face significant U.S. tariffs under previous measures.
Under the legal framework, these measures must comply with World Trade Organization (WTO) rules, which require that safeguards be temporary, applied broadly (erga omnes), and not harm EU businesses reliant on imports of the affected goods. The Enforcement Regulation (Regulation (EU) No 654/2014) previously allowed the EU to apply rebalancing measures in response to U.S. Section 232 tariffs, but the EU now has additional tools such as the 2023 Anti-Coercion Instrument (ACI) to implement more targeted and flexible responses.
The proposed tariffs are planned to phase in gradually, with some duties commencing as early as mid-April, others by mid-May, and a smaller portion delayed until December 2025. The European Commission intends to fine-tune the measures following further consultations, ensuring the response is proportionate and strategically effective. In addition to goods tariffs, the EU is exploring the possibility of broader “anti-coercion” actions, including restrictions on U.S. services and access to public procurement, if negotiations do not yield a resolution.
Political Context and Strategic Considerations
The European Union’s response to the United States’ imposition of tariffs is shaped by a complex political context and strategic calculations aimed at preserving the transatlantic relationship while protecting European economic interests. Central to this is the recognition that the EU must navigate negotiations with an unpredictable U.S. administration under President Trump, whose transactional approach challenges traditional assumptions about a strong transatlantic partnership. The EU’s strategy seeks not only to pressure the United States into reaching a mutually beneficial trade agreement but also to prepare for the possibility that higher tariffs may become a long-term feature of the relationship.
At the heart of the political context is the EU’s desire to engage the U.S. administration constructively, despite the latter’s readiness to impose tariffs on steel, aluminum, and other sensitive goods. The EU’s response strategy emphasizes a calibrated and flexible approach, balancing the need to retaliate against tariffs with a preference for negotiation and compromise to avoid a damaging tariff war. European leaders, including the French Trade Minister Laurent Saint-Martin, have publicly underscored that a tariff conflict would be harmful to all parties involved, reinforcing the EU’s commitment to dialogue and de-escalation.
Strategically, the EU is considering a range of countermeasures, including the potential use of an “anti-coercion” tool adopted in 2023, which could target U.S. services or limit access to public procurement if negotiations fail. Member states such as Germany have shown increased willingness to deploy these wide-ranging measures to defend the bloc’s interests in the face of ongoing tariff threats. While the European Commission retains authority to implement trade policies, certain critical decisions—such as imposing definitive duties—still require consensus among EU Member States, highlighting the internal political dynamics that influence the EU’s response framework.
The strategic calculations also extend to managing broader geopolitical concerns, including the EU’s trade relations with China. European diplomats have indicated that the bloc is monitoring China’s retaliatory tariffs closely, as these could impact the transatlantic trade balance and potentially lead to increased Chinese goods entering the European market. This underscores the EU’s need to balance its responses to U.S. tariffs with the risk of exacerbating trade tensions with other major partners.
Moreover, the EU’s approach incorporates multilateral dimensions, with the potential activation of the World Trade Organization’s dispute settlement system to affirm commitment to international trade law, even if such actions may offer limited immediate practical effect due to the WTO’s slow procedures. The EU also recognizes the strategic importance of energy ties with the United States, particularly in the context of shared efforts to respond to Russian military aggression, reinforcing the transatlantic trade relationship’s significance beyond pure economic terms.
Economic and Trade Implications
The ongoing trade tensions between the European Union (EU) and the United States (US) have significant economic and trade implications for both parties. Discussions are underway within the EU to implement two lists targeting US products, expected to come into force by mid-April, with additional countermeasures potentially being introduced by the end of the month in response to US tariffs on cars and reciprocal tariffs. The EU is also considering targeting the US trade surplus in services, which amounted to €109 billion in 2023, and may deploy the ‘anti-coercion’ instrument adopted in 2023 to affect business licenses and intellectual property rights.
From the US perspective, Executive Order 14257 issued on April 2, 2025, highlighted the national security and economic threat posed by large and persistent annual US goods trade deficits. To address this, the US declared a national emergency and imposed additional ad valorem duties deemed necessary to rectify trade practices contributing to these deficits. Despite these measures, the US will not face higher tariffs for exporting to the EU, maintaining a trade relationship that has doubled over the past decade to surpass €1.6 trillion in 2024.
The EU emphasizes its commitment to defending European industry by removing trade barriers to ensure fair market access for exporters, while also providing practical support for foreign companies aiming to access the EU market. However, the im
Reactions to the EU’s Planned Measures
The European Union’s consideration of a broad range of “anti-coercion” measures to respond to U.S. tariffs has elicited varied reactions among member states and international observers. Several EU members, notably Germany, have increasingly supported the use of the EU’s wide-ranging “anti-coercion” instrument (ACI), which would allow the bloc to retaliate against third countries exerting economic pressure to influence EU policies. This includes potential actions targeting U.S. services sectors and restricting access to public tenders if no agreement is reached.
EU officials have been preparing to announce a strategic plan to counteract both the U.S. car levies and the 20% tariffs imposed on European exports, with the intention to consult member states before proceeding to a formal vote. Policymakers emphasize that all options remain open, suggesting that initial measures could be followed by further retaliatory actions. Among the more ambitious proposals is the so-called “bazooka”—a trade weapon aimed at significant American service companies, including major technology firms such as Google.
The looming threat of U.S. tariffs has stirred concern among European leaders and businesses alike. EU leaders convened in Brussels amid apprehensions over the impact of U.S. protectionist policies, which have extended beyond Europe to include Canada, Mexico, and China. European businesses have been urged to closely monitor these developments to understand how escalating tariffs might disrupt supply chains and economic stability within the bloc.
These EU countermeasures are part of a broader context of ongoing trade disputes and retaliatory actions involving the United States and the EU, including longstanding conflicts over subsidies in the large civil aircraft sector and various Section 232 and Section 301 trade actions imposed by the U.S.. The EU’s readiness to deploy its anti-coercion framework reflects a growing determination to protect its economic interests and uphold fair trade practices amid increasing global trade tensions.
Future Outlook
The European Union is poised to announce its next steps in responding to the United States’ tariffs, with key developments expected imminently. EU officials have indicated plans to unveil a retaliatory strategy targeting both the U.S. car levies and the 20 percent tariffs imposed on various goods. This announcement is anticipated to outline the contours of the EU’s response, followed by consultations with member states and a subsequent vote on implementation. Policymakers emphasize that all options remain on the table, including the potential deployment of the so-called EU “bazooka,” a trade tool designed to affect American service sectors, notably large technology firms such as Google.
Two lists of U.S. products targeted for retaliation have already been discussed among member states, with an initial wave of countermeasures set to come into force by mid-April. Additional measures are under consideration for a second wave of retaliation, which could be activated by the end of the month. Potential targets include the U.S. trade surplus in services and the application of the EU’s newly adopted ‘anti-coercion’ instrument, capable of affecting business licenses and intellectual property rights.
At the same time, the WTO dispute settlement mechanism continues to play a role in the broader trade conflict, with panels expected to issue reports on ongoing disputes that may influence future EU actions. However, given the slow pace of the WTO process, the EU’s WTO complaints are viewed as largely symbolic in the near term, serving to reaffirm commitment to international law rather than offering immediate practical relief.
The broader transatlantic trade relationship remains significant, with trade in goods and services exceeding €1.5 trillion annually and extensive employment generated by US-European companies. Nonetheless, the persistence of tariff and non-tariff barriers continues to prompt both sides to seek regulatory cooperation and dispute resolution, albeit within a climate of escalating retaliatory measures.
In this context, businesses operating across the Atlantic are advised to maintain vigilance and adapt proactively to shifting trade policies to manage risks related to market access, tariffs, and regulatory changes. Stakeholders are also encouraged to participate in consultation processes surrounding the adoption of new trade measures under the EU’s Anti-Coercion Instrument (ACI) to influence outcomes beneficially.
The content is provided by Blake Sterling, Front Signals
