Europe Prepares for a Trade Fight With U.S.

The European Union thought it was on the verge of a deal with the U.S. to keep tariffs in check.

- Kim Mackrael & Bertrand Benoit

Now it is readying a counterattack.

U.S. officials told the EU's trade chief this past week that they expect President Trump to demand further concessions from the bloc to get an agreement, including a baseline tariff on most European goods that could be in the range of 15% or higher, according to people briefed on the talks. That was an unwelcome surprise for the EU, which had been working toward an agreement that would have kept baseline tariffs at 10%, already a tough concession for some of its 27 countries. The shift prompted Germany, Europe's biggest economy and its largest exporter, which had previously been more dovish on U.S. retaliation, to swing closer to France's more confrontational position, according to people close to the discussions.

Now, EU member states are pressing the bloc's executive body to prepare new and potent measures to hit back against U.S. companies, beyond retaliatory tariffs on goods, if a deal can't be reached by the Aug. 1 deadline set by Trump, the people said. "All options are on the table," a German official said Friday. The official said there was still time to negotiate a deal but added, "If they want war, they will get war."

The push to increase potential countermeasures marks a turning point for the EU after months of negotiations to salvage the world's biggest trading relationship. More than $5 billion of goods and services moves between the two economies every day, according to EU data.

The European Commission, which is in charge of the bloc's trade policy, said Sunday that it wants a negotiated, mutually beneficial agreement and remains deeply engaged in negotiations. If no satisfactory outcome is found, all options remain on the table, a spokesman said.