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The European Union has issued a stern warning to the U.S., stating it is prepared to retaliate if President Donald Trump proceeds with his plan to impose 30% tariffs on European imports starting August 1. The surprise move risks escalating tensions with the EU, Washington’s largest trading partner, just as both sides were hoping to cool a long-simmering trade dispute.
European Commission President Ursula von der Leyen emphasized the bloc’s readiness to defend its economic interests through proportionate countermeasures. EU ambassadors will meet Sunday, followed by an emergency gathering of trade ministers on Monday to determine whether to impose retaliatory tariffs on up to €21 billion worth of U.S. goods or extend an expiring suspension.
The EU has two retaliation packages prepared, targeting a total of €93 billion in U.S. exports. German Economy Minister Katherina Reiche and French President Emmanuel Macron both backed von der Leyen, with Macron suggesting the use of anti-coercion measures—potentially impacting services trade—if Trump doesn't back down.
Trump has long criticized the EU, citing a $235 billion trade deficit in goods, though the EU counters with a U.S. surplus in services. Analysts warn the proposed tariffs could disrupt $9.5 trillion in transatlantic trade and hit both U.S. consumers and the eurozone economy.
Markets remain cautiously optimistic, noting Trump’s history of walking back tariffs before deadlines. However, economists like ING’s Carsten Brzeski and HCOB’s Cyrus de la Rubia warn that the EU must now choose between compromise and confrontation, with broader implications for global trade stability.
The European Central Bank’s forecasts show that a 30% U.S. tariff could slash eurozone growth and lower inflation, intensifying economic headwinds across the region.
