EU Faces Critical Choice Amid Trump's Tariff Salvo

It Can Try to Reach a Trade Deal With US, or Impose Punitive Tariffs on American Goods

- Jonathan Eyal

Global Affairs Correspondent BRUSSELS - Trade ministers from the European Union's 27 member states meeting in Brussels on July 14 face a critical choice.

They can decide to persist in efforts to reach a trade deal with the US. Or they can respond to US President Donald Trump's latest threats to impose massive tariffs on European exports by imposing their own punitive tariffs against American products.

What is clear, however, is that Mr. Trump's shock threat to impose a 30 percent tariff rate on the EU from August 1 is a severe blow to Europe's confidence.

And it may generate painful splits inside the EU between member states that argue the only way of dealing with Mr. Trump is by confronting him head-on, and those desperate to avoid a trade war at any cost.

The EU and the US still account for the world's most significant bilateral trade and investment relationship.

The bilateral EU-US trade in goods and services in 2024 amounted to €1.68 trillion (S$2.5 trillion), or around 30 percent of global trade. The EU and the US remain each other's top trading partners.

The snag is that the EU's surplus in trade of goods with the US is growing: It stood at €198 billion in 2024.

The Europeans point out that their surpluses in manufactured goods are largely offset by America's corresponding and equally large trading surplus in services and that, as a result, Europe's overall trade surplus with the US is just €50 billion.

But such arguments cut no ice with Mr. Trump, who remains fixated on trade in manufactured goods.

EU officials were angered by Mr. Trump's initial threat to impose a 20 percent tariff on European goods, unveiled on April 2, the date he refers to as "Liberation Day."