Published by Global Banking & Finance Review®
Posted on July 12, 2025
4 min readLast updated: January 22, 2026
Add as preferred source on GoogleThe EU is negotiating a trade deal with the US while preparing to defend against possible tariffs. The outcome could impact both economies significantly.
(Reuters) -The EU is ready to retaliate to safeguard its interests if the U.S. proceeds with imposing a threatened 30% tariff on European goods starting on August 1, European Commission President Ursula von der Leyen said on Saturday.
However, von der Leyen, head of the EU executive which handles trade policy for the 27 member countries of the EU, said it was also ready to keep working towards an agreement by August 1.
"Few economies in the world match the European Union's level of openness and adherence to fair trading practices," she said in response to new threats by U.S. President Donald Trump on Saturday escalating a trade war Europe had hoped to avoid.
"We will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required," she said of possible retaliatory tariffs on U.S. goods entering Europe.
European capitals swiftly backed that position.
"As part of European unity, it is more than ever up to the Commission to assert the Union's determination to defend European interests resolutely," French President Emmanuel Macron said on X.
German Economy Minister Katherina Reiche urged a statement for a "pragmatic outcome to the negotiations".
"The tariffs would hit European exporting companies hard. At the same time, they would also have a strong impact on the economy and consumers on the other side of the Atlantic," she said.
Spain's Economy Ministry backed further negotiations but added that Spain and others in the EU were ready to take "proportionate countermeasures if necessary".
Trump has periodically railed against the European Union, saying in February it was "formed to screw the United States" and asking why Europe exports so many cars but buys so few U.S. cars in return.
His biggest grievance is the U.S. merchandise trade deficit with the EU, which in 2024 amounted to $235 billion, according to U.S. Census Bureau data. The EU has repeatedly pointed to the U.S. surplus in services, arguing it in part redresses the balance.
Combining goods, services and investment, the EU and the United States are each other's largest trading partners by far. The American Chamber of Commerce to the EU said in March the trade dispute could jeopardise $9.5 trillion of business in the world's most important commercial relationship.
"Europe must not allow itself to be intimidated by this, but must soberly seek a solution at the negotiating table on equal terms," said Dirk Jandura, president of the German exporters association BGA, adding the latest threats were a "well-rehearsed" part of his negotiating strategy.
Carsten Brzeski, global head of macro at ING, said Trump's move suggested that months of negotiations remained deadlocked and that things were inching towards a make-or-break moment for the transatlantic trade relationship.
"The EU will now have to decide whether to budge or to play hardball," he said. "Its hard to draw real conclusions right now other than this will bring market volatility and even more uncertainty."
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, noted that the brunt of the U.S. tariffs, if implemented, would be felt by U.S. consumers.
"The EU should take a hard line in negotiations, because model calculations show that tariffs against the EU have a stronger negative effect in the US than in the eurozone."
That said, there would also be clear repercussions for the euro area economy, already struggling with weak growth.
The European Central Bank had used a 10% tariff on EU exports to the United States as the baseline in its latest economic projections, which put output growth in the euro area at 0.9% this year and 1.1% the next and 1.3% in 2027.
It said a 20% U.S. tariff would curb growth by 1 percentage point over the same period and also pull down inflation to 1.8% in 2027, from 2.0% in the baseline scenario. It did not even offer an estimate for the possibility of a 30% tariff.
(Reporting by Ana Cantero Rios in Madrid, Maria Martinez and Christian Kraemer in Berlin, John Revill in Zurich, Francesco Canepa in Frankfurt, Charlotte Van Campenhout in Brussels; Writing by Mark John, Editing by William Maclean)
The EU is prepared to retaliate with countermeasures if the US imposes a 30% tariff on European goods, while also expressing a desire to continue negotiations.
US tariffs could significantly impact European exporting companies and also have repercussions for the euro area economy, which is already facing weak growth.
European leaders, including French President Emmanuel Macron, emphasize the need for unity and assertiveness in defending EU interests during the negotiations.
The US merchandise trade deficit with the EU amounted to $235 billion in 2024, highlighting ongoing tensions in trade relations.
The European Central Bank projected that a 20% US tariff could reduce growth in the euro area by 1 percentage point and lower inflation in the coming years.
Explore more articles in the Headlines category
