What Europe’s response to a no-deal with Trump could look like
US President Donald Trump delivers remarks at the “Winning the AI Race” AI Summit at the Andrew W. Mellon Auditorium in Washington, DC, on July 23, 2025.
Andrew Caballero-reynolds | Afp | Getty Images
As uncertainty looms over the potential trade agreement between the European Union and the U.S., Brussels is preparing for a no-deal scenario.
Lawmakers have approved a package of counter-tariffs targeting a variety of goods, with discussions underway about activating the EU’s “trade bazooka.”
The looming Aug. 1 deadline is adding pressure, as EU imports to the U.S. face the threat of 30% tariffs, prompting swift responses from both sides.
While talks of a potential deal with a 15% tariff on EU imports circulate, the outcome remains uncertain given President Donald Trump’s unpredictable nature.
Retaliatory tariffs
The European Commission has combined proposed duties into a comprehensive list totaling tariffs on €93 billion ($109 billion) worth of goods, including food, clothing, and machinery.
If no deal is reached, the EU is expected to retaliate with tariffs of up to 30% on select U.S. goods.
EU member states have approved the measures, set to go into effect shortly after the U.S.’ deadline.
In the absence of a deal, ING’s Carsten Brzeski anticipates tit-for-tat tariffs from the EU to match those imposed by the U.S.
The ‘trade bazooka’
The EU’s anti-coercion instrument, known as the “trade bazooka,” is being considered as a deterrent against economic coercion from non-EU countries.
While the EU aims to resolve conflicts through dialogue, the instrument allows for import/export restrictions if necessary.
Despite the EU’s shift towards a more confrontational stance, activation of the ACI remains uncertain as it is seen as a negotiating tool and leverage in potential trade disputes.
— CNBC’s Silvia Amaro contributed to this story.
