The European Union is looking into a wider range of potential counter-measures against the United States, as hopes for a mutually acceptable trade agreement with Washington appear to be fading, according to EU diplomats, reports RTE.
A growing number of EU nations, including Germany, are now weighing the use of broad “anti-coercion” tools that would allow the bloc to target US services and other industries if no deal is reached, diplomats say.
The European Commission, which represents the 27 EU countries in trade talks, had seemed close to finalising an agreement that would still see the EU subject to a 10% US tariff on most of its exports, along with certain concessions, reports RTE.
However, those expectations have dimmed following US President Donald Trump’s threat to raise tariffs to 30% by 1 August, a move that comes after discussions in Washington last week between EU Trade Commissioner Maroš Šefčovič and US officials.
Mr Šefčovič, who has warned that a 30% tariff would “practically prohibit” trade across the Atlantic, gave EU envoys a bleak update on the negotiations on Friday, according to diplomats who spoke with Reuters, reports RTE.
US officials had proposed varying approaches, including a minimum tariff rate that could exceed 10%, the EU diplomats said.
“Each interlocutor seemed to have different ideas. No one can tell what would actually fly with Trump,” one diplomat noted, reports RTE.
Chances of the US scaling back or removing existing tariffs of 50% on steel and aluminium and 25% on vehicles and auto parts now seem slim.
The US has also dismissed the EU’s request for a “standstill” clause, which would have prevented further tariffs from being introduced once a deal is reached, reports RTE.
According to diplomats, this is because Mr Trump insists his national security powers under Section 232 must remain unrestricted, particularly in ongoing probes into sectors such as pharmaceuticals, semiconductors, and timber.
As a result, EU diplomats say sentiment among member states has shifted, with countries increasingly prepared to respond, though a negotiated solution remains the preferred path, reports RTE.
Currently, the EU has one set of tariffs affecting €21bn worth of US goods that is on hold until 6 August. A decision is still pending on a second group of counter-measures affecting €72bn in US exports.
There is also renewed discussion about deploying the EU’s broad “anti-coercion” instrument (ACI), which enables the bloc to strike back at countries exerting economic pressure on member states to alter their policies, reports RTE.
Originally designed with China in mind, the ACI could allow the EU to target US service providers, restrict their access to public contracts or financial markets, or limit American investments.
France has long supported using the ACI, but some EU countries have hesitated, seeing it as an extreme step, reports RTE.
Mr Trump has issued warnings that he would retaliate if any nation moves against the US.
European Commission President Ursula von der Leyen said the ACI is intended for exceptional circumstances, adding: “we are not there yet,” reports RTE.
To activate the ACI, the Commission would need backing from a qualified majority—15 countries representing 65% of the EU population.
It would not proceed without being certain it could pass, but EU diplomats say momentum is building, with Germany among the countries now open to considering its use, reports RTE.
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