EU Signals Readiness for Tariff-Free Trade Pact with US, But Will Retaliate If Needed

The European Union (EU) has signalled its willingness to negotiate a tariff-free trade pact with the United States (US), but has indicated it is also prepared to retaliate if necessary.

Trade ministers met in Luxembourg on Monday to discuss the bloc’s response to US tariffs on steel and aluminium, with most agreeing that launching talks to avoid an all-out trade war should be the priority.

Following the meeting, EU Trade Commissioner Maros Sefcovic told reporters that the bloc’s countermeasures would be adjusted after considering member states’ feedback.

“When it comes to steel, aluminium and derivatives, we are talking about 26 billion euros [$28bn],” he said. “We are finalising the list tonight, but I can tell you that it will not be up to the level of 26 billion euros, because we’ve been listening very carefully to our member states,” said Sefcovic.

European Commission President Ursula von der Leyen had earlier stated that the EU was prepared to negotiate a “zero-for-zero” tariff agreement on industrial goods. However, the bloc confirmed that it would begin imposing retaliatory duties on selected US imports next week.

“Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise,” Sefcovic said at a news conference.

He added that the first round of EU tariffs on US goods would take effect on April 15, with a second wave set for May 15, in direct response to Washington’s duties on European steel and aluminium.

Also See: More Than 50 Nations Reach Out to US for Trade Negotiations After Tariffs Imposed

Escalation is on the table

While the EU’s preference remains negotiation, Sefcovic warned that the bloc was ready to escalate its response if necessary. This could include invoking the Anti-Coercion Instrument (ACI), allowing the EU to restrict US companies’ access to public contracts or target American services.

But some EU countries, particularly exposed to trade with the US, urged caution. Irish Foreign Minister Simon Harris described the ACI as “very much the nuclear option” and said he believed most EU countries were not ready to go near it, at least for now.

The EU faces 25 percent US tariffs on steel, aluminium, and cars, along with 20 percent duties on nearly all other goods under US President Donald Trump’s protectionist policies.

In a war of tariffs on goods, Brussels has less room to manoeuvre than Washington, given EU goods imports from the US totalled 334 billion euros ($366.2bn) in 2024, against 532 billion euros ($582.1bn) of EU exports to the US.

Dutch Trade Minister Reinette Klever has urged restraint, warning that immediate escalation could further disrupt markets.

“We need to remain calm and respond in a way that de-escalates. The stock markets right now show what will happen if we escalate straightaway. But we will be prepared to take countermeasures if needed to get the Americans at the table,” said Klever.

Despite the EU’s measured approach, its planned tariffs remain contentious.

Trump has already threatened a 200 percent counter-tariff on EU alcoholic beverages if the bloc proceeds with a proposed 50 percent duty on US bourbon. The move has raised concerns in France and Italy, key exporters of wine and spirits.

This news is sourced from Al Jazeera and is intended for informational purposes only.