US President Donald Trump delivers remarks on the “Profitable the AI Race” AI Summit on the Andrew W. Mellon Auditorium in Washington, DC, on July 23, 2025.
Andrew Caballero-reynolds | Afp | Getty Pictures
Brussels is getting ready for a no-deal situation as uncertainty persists about if and when a commerce settlement between the European Union and U.S. will materialize.
Lawmakers on Thursday signed off on a significant package deal of counter-tariffs which might goal a variety of products and discussions are reportedly ongoing about deploying the EU’s so-called “commerce bazooka.”
Measures might kick in quickly as there are only a few days left earlier than Aug. 1, after which EU imports to the U.S. are set to be slapped with 30% tariffs and the EU is anticipated to reply promptly.
Talks of a possible deal have nevertheless additionally been heating up this week, with sources telling CNBC that the present base-case situation for a deal features a 15% tariff on EU imports to the U.S. Any doable exemptions are nonetheless being labored out, they famous.
However crucially, a lot relies on U.S. President Donald Trump, who is thought for final minute modifications of coronary heart and fast choice making. There are subsequently no ensures about what a possible deal might appear to be.
On Friday, Trump instructed reporters that there was solely a “50-50” probability of a deal between the U.S. and EU.
“I’d say that now we have a 50-50 probability, possibly lower than that, however a 50-50 probability of constructing a cope with the EU,” mentioned Trump.
Retaliatory tariffs
This week the European Fee mixed two packages of proposed duties into one listing, which totals tariffs on 93 billion euros ($109 billion) of a variety of products from food and drinks objects to clothes and equipment.
A supply instructed CNBC earlier this week that tariffs might be as excessive as 30%, mirroring these from the U.S.
EU member states reportedly on Thursday voted to approve the mixed listing. The measures are set to come back into impact simply days after the U.S.’ Aug. 1 deadline.
Carsten Brzeski, world head of macro at ING, instructed CNBC on Friday that he expects tariff-level retaliation from the EU within the absence of a deal.
“In a non-deal situation with out one other delay of US tariffs, I see the EU going for a tit-for-tat method, ie imposing 30% tariffs on chosen US items, not but all items, just like the well-known bikes, vehicles, clothes and alcohol,” he mentioned in emailed feedback.
“On condition that European international locations should not totally aligned on learn how to react, I can’t see the EU going full in however somewhat looking for a steadiness between displaying that it reacts however with out going past the US measures,” Brzeski added.
The ‘commerce bazooka’
One other broadly mentioned possibility is the EU’s so-called anti-coercion instrument, which has been known as a “commerce bazooka.”
The measure is designed to be a deterrent, with the European Fee saying it might “be most profitable if there isn’t any want to make use of it.” But when a 3rd nation does have interaction in coercion, “the instrument permits the Union to formally determine cases of financial coercion and to reply.”
The bloc views financial coercion as interference from non-EU international locations within the area’s insurance policies by threatening or imposing measures that affect commerce and funding.
Whereas the European Fee notes that dialogue and engagement can be a part of their response to such coercion, the ACI for instance, additionally permits for import and export curbs and restrictions on accessing the EU’s market.
The EU could possibly impose export restrictions no matter whether or not it deploys its anti-coercion instrument, mentioned ING’s Brzeski.
Alberto Rizzi, coverage fellow on the European Council on Overseas Relations, instructed CNBC on Friday that regardless that the ACI is taken into account the ‘nuclear possibility,’ “in actuality there’s room for flexibility in its utility, so long as the retaliatory measures stay proportionate to the hurt of the coercion.”
Rizzi instructed that regardless of the temper throughout the EU shifting to turn into extra confrontational and supportive of “swift and substantial” retaliation in a no-deal situation, it’s unsure when the ACI might be activated.
“Retaliation is seen as a negotiating software by the EU, so the ACI will in all probability be activated solely in a second section if there isn’t any response by the US after the tariff packages enters into pressure — the EU would need to preserve it as leverage somewhat than utilizing it instantly,” he mentioned.
— CNBC’s Silvia Amaro contributed to this story.
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