The European Union is preparing a much more extensive package of possible countermeasures, which could also be directed against American internet giants. If an agreement with the United States is not reached by the end of July, as planned, more and more EU countries are ready to react more sharply, diplomatic sources quoted by Reuters say, BTA writes.
This applies even to Germany, which has so far been more restrained than Austria or France. "There will be no deal at any price", German Finance Minister Lars Klingbeil recently said. German Chancellor Friedrich Merz, however, wants to avoid an escalation of the trade dispute, which has been going on since the spring. The EU should not take countermeasures before August 1st and only if the talks fail, he said recently.
The European Commission, which is negotiating trade agreements on behalf of the 27-nation bloc, had thought it was on track to reach a deal in which the EU would still face a 10 percent U.S. tariff on most of its exports, but with some concessions.
After President Donald Trump's threat to impose a 30 percent tariff by August 1st and after talks between EU Trade Commissioner Maroš Šefčovič and his U.S. counterparts in Washington last week, those hopes appear dashed.
Šefčovič, who said a 30 percent tariff would "virtually ban" transatlantic trade, presented a new report on the current state of negotiations to EU ambassadors late last week, diplomats told Reuters.
During Šefčovič’s meetings, “the American partners proposed different solutions, including a base rate that could exceed 10 percent,” the EU diplomats added.
“Each interlocutor seemed to have different ideas. No one can tell (Šefčovič) what would actually happen with Trump,” one diplomat said.
There appears to be little hope of easing or eliminating US tariffs of 50 percent on steel and aluminum and 25 percent on cars and car parts.
Washington also rejected the EU’s request for a “standstill” agreement, in which no additional tariffs would be imposed after a deal is struck. Diplomats say the argument is that Trump's hands cannot be tied on national security, which is at the heart of the negotiations on pharmaceuticals, semiconductors and timber. All this has changed the mood among EU countries, and they are more prepared to respond with countermeasures, although a negotiated solution is their preferred option. The EU has a package of tariffs on US goods worth 21 billion euros, which is currently frozen until August 6. The bloc has yet to decide on a further package of countermeasures on US exports worth 72 billion euros. Discussions have also intensified on using the EU's broad-based "counter-coercion" tool (ACI), which allows the bloc to take retaliatory measures against third countries that put economic pressure on member states to change their policies.
It would allow the EU to hit US services trade, where the US has a trade surplus with the EU, and to restrict US companies' access to EU financial services markets and public procurement. EU public procurement is worth around €2 trillion a year.
Possible measures also include curbing US investment and limiting the protection of intellectual property rights, as well as restrictions on the ability to sell US chemicals or food products in Europe.
France has consistently advocated using this mechanism, but other countries have refrained, calling it a "nuclear option". Trump has warned that he will retaliate if other countries take action against the United States.
A week ago, European Commission President Ursula von der Leyen said the special mechanism was designed for emergencies, adding: "We are not there yet".
To use it, the EC would need the approval of a qualified majority of 15 countries, representing 65 percent of the EU population. It would not put it to a vote if it were not certain it would pass, but there are now growing signs of support, with Germany among the countries saying the option should be considered, EU diplomats said.