EU to ramp up retaliation plans as US tariff deal prospects dim

The European Union is exploring a broader set of possible countermeasures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.

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An increasing number of EU members, including Germany, are now considering using wide-ranging “anti-coercion” measures which would let the bloc target US services or curb access to public tenders in the absence of a deal, diplomats say.

The European Commission, which negotiates trade agreements on behalf of the 27-member bloc, had appeared on course for a agreement in which the EU would still have faced a 10% US tariff on most of its exports, with some concessions.

Such hopes now seem dashed after President Donald Trump's threat to impose a 30% tariff by August I, and following talks between EU Trade Commissioner Maros Sefcovic and US counterparts in Washington last week.

Sefcovic, who has said a 30% tariff would “practically prohibit” transatlantic trade, delivered a sober report on the current state of play to EU envoys on Friday, diplomats told Reuters.

US counterparts had come up with diverging solutions during his meetings, including a baseline rate that could be well above 10%, the EU diplomats added.

“Each interlocutor seemed to have different ideas. No one can tell (Sefcovic) what would actually fly with Trump,” one diplomat said.

Prospects of easing or removing 50% US tariffs on steel and aluminium and 25% on cars and car parts appear limited.