- The EU is challenging U.S. tariffs at the WTO, accusing the U.S. of violating trade rules and preparing €95 billion in retaliatory measures.
- The U.S. has imposed a 25% tariff on foreign vehicles, harming European automakers, while Trump threatens a 20% tariff on all EU imports.
- The EU’s countermeasures target key U.S. industries, including spirits, aerospace, and auto parts, potentially forcing manufacturers to move production overseas.
- Negotiations remain stalled, with the EU pausing some retaliatory tariffs but warning they could be reinstated if no deal is reached.
- A full-blown trade war looms as both sides refuse to back down, risking economic fallout for businesses and consumers on both sides of the Atlantic.
The European Union is gearing up for a high-stakes trade battle with the United States, launching a formal dispute at the World Trade Organization (WTO) over President Donald Trump’s controversial “reciprocal” tariffs while preparing retaliatory measures worth €95 billion ($107.4 billion) on American imports.
The move comes as the U.S. has already imposed a 25% tariff on foreign vehicles in a policy that has hit European automakers hard. With negotiations stalled, the EU is signaling it won’t back down, even as European Commission President Ursula von der Leyen insists the bloc remains open to a negotiated solution.
EU takes legal action against U.S. tariffs
The European Commission has accused the U.S. of violating WTO rules by unilaterally imposing tariffs without proper justification. “The EU’s objective is thus to reaffirm that internationally agreed rules matter, and these cannot be unilaterally disregarded by any WTO member, including the US,” the Commission stated. The dispute will begin with formal consultations, a required step before the WTO can rule on the legality of the U.S. measures.
At the heart of the conflict is Trump’s threat to impose a 20% tariff on all EU imports, a move that would escalate an already tense trade relationship. The U.S. has already levied a 25% tariff on imported vehicles, a policy that has drawn sharp criticism from European leaders. European Trade Commissioner Maroš Sefcovic emphasized that while the EU prefers negotiation, it is preparing for all scenarios.
Retaliatory tariffs target key U.S. industries
The EU’s proposed countermeasures include a sweeping list of American goods, from agricultural products to aerospace components. Among the most notable targets are bourbon, tequila, and other spirits in what is a direct response to Trump’s earlier threat of a 200% tariff on EU alcohol imports. The list also includes $10.5 billion in aircraft, $10.3 billion in vehicle parts, and $2 billion in vehicles, potentially impacting major U.S. manufacturers like Boeing.
John Plueger, CEO of Air Lease Corp., warned that prolonged tariffs could force U.S. aerospace companies to shift production overseas. “If tariffs were to remain long term, it could ultimately serve as an incentive for U.S. aerospace manufacturers to look outside the U.S. to start additional production lines for product delivery outside the U.S.,” he said.
The EU has temporarily paused an earlier set of retaliatory tariffs on $24.1 billion worth of U.S. goods, including steel and aluminum, to allow for further negotiations. However, if no resolution is reached, these measures could be reinstated alongside the new €95 billion list.
A transatlantic trade war looms
The escalating tensions come as the U.S. and EU struggle to find common ground on trade policy. While the UK recently secured a trade deal with the U.S., the EU has taken a more confrontational approach, insisting that Trump’s tariffs violate global trade rules. “We believe there are good deals to be made for the benefit of consumers and businesses on both sides of the Atlantic,” von der Leyen said.
Trump, meanwhile, has doubled down on his aggressive trade stance, claiming the EU has treated the U.S. unfairly. “They very much want to make a deal. We’ll be dealing with them,” he said during the announcement of the UK agreement.
With both sides digging in, the risk of a full-blown trade war grows. The EU’s public consultation on countermeasures will remain open until June 10, after which the Commission will decide its next steps. If negotiations fail, the economic fallout could be severe, affecting industries from aviation to agriculture and raising costs for businesses and consumers on both sides of the Atlantic.
As the EU and U.S. brace for a prolonged trade dispute, the EU’s decision to challenge Trump’s tariffs at the WTO underscores its commitment to a rules-based global trading system, even as it prepares for the possibility of economic retaliation. With billions in trade at risk and no clear resolution in sight, the coming months will test whether diplomacy can prevail or if the transatlantic alliance will fracture further under the weight of escalating tariffs.
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