The European Union is preparing a scenario of not reaching a trade agreement with the United States before the August 1st deadline, aiming to counter the risk of a 30% tariff on EU exported goods to the United States.
Currently, negotiations are prolonged but without clear progress. If no agreement is reached, the EU will impose retaliatory tariffs and activate strong measures to protect the bloc's economic interests.
- EU is preparing for a scenario without a trade agreement with the United States before August 1st.
- The US tariff on EU goods could be 30%, while the EU is ready to impose retaliatory tariffs worth around $109.4 billion.
- EU is considering using the Anti-Coercion Instrument to limit US suppliers' access to the European market.
Why is the EU preparing a contingency plan when trade negotiations with the US are prolonged?
The EU predicts a very high probability of not reaching an agreement before the August 1st deadline, so it has begun building a contingency plan to minimize risks for European businesses.
Currently, without an agreement, the US will impose a 30% tariff on EU goods, reduced from the previously threatened 50% but still causing a significant negative impact on bilateral trade. An EU diplomatic source revealed to CNBC that the basic tariff is expected to be 15%, plus an additional 4.8% of existing tariffs, but nothing is certain and exceptions are still being negotiated.
The negotiations are being delayed due to instability from the US side, especially since the final decision depends on the US president, keeping all possibilities open.
Expert Opinions on Tariff Impact and Negotiation Situation
Chief Economist Holger Schmieding from Berenberg assesses that a 15% tariff is a more positive result compared to previous Trump threats, but still a significant burden if implemented. Meanwhile, EU officials say information about an imminent agreement is too optimistic, and everything will only be clear when the US president makes an official decision.
The US negotiation ambitions could change unexpectedly, making it difficult for European partners to develop long-term plans.
Holger Schmieding, Berenberg Chief Economist, 2025
How is the US Responding to New Tariff Scenarios from the EU?
The US side appears unclear, with White House representatives calling speculations about a 15% tariff unfounded. The instability in Trump's and his negotiation team's opinions has led the dialogue process into a deadlock and sometimes been unexpectedly interrupted.
This is evidenced by images capturing continuous edits on the US president's trade notes during a meeting with Japan, showing the risk of sudden changes in negotiation strategy.
Nevertheless, the European market still experiences slight increases due to investor expectations that an agreement might be formed, but the truth remains uncertain until the US president officially agrees.
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