EU faces 30% tariffs as Trump issues ultimatum

July 15, 2025 (MLN): The European Union has been left scrambling after U.S. President Donald Trump announced plans to impose a 30% tariff on goods imported from the bloc starting August 1.

European leaders responded quickly, expressing hope for a negotiated agreement before the deadline.

In a bid to keep the talks alive, the EU delayed countermeasures that were scheduled to take effect this week and warned that preparations for additional retaliatory measures were underway.

EU Trade Commissioner Maros Sefcovic acknowledged receipt of Trump’s letter with “regret and disappointment ... especially considering the advanced stage of our ongoing negotiations.”

 He emphasized the EU's continued commitment to a negotiated solution while preparing for all possible outcomes, including countermeasures, as CNBC reported.

Sefcovic also stated he would be speaking to his U.S. counterparts later in the day, noting, “I cannot imagine walking away without genuine effort.”

With less than a month remaining, the EU faces mounting pressure to act swiftly to prevent the tariffs or risk an escalation in trade tensions.

Economists and analysts echoed concerns, saying the 30% tariff threat has intensified pressure on the 27-member bloc.

“It’s very bad news for Europe,” said Alicia Garcia-Herrero, senior fellow at Bruegel and chief economist for Asia-Pacific at Natixis, during an interview with CNBC’s “Europe Early Edition.”

Carsten Brzeski, global head of macro at ING, and Inga Fechner, a senior economist at ING, also commented on the development, describing Trump’s letter as an attempt to “increase pressure in the ongoing negotiations.”

They outlined several options for the EU, including boosting purchases of U.S. goods such as soybeans and military equipment, reducing tariffs on U.S. cars, or introducing export bans on sensitive items like European-made pharmaceuticals.

As a last resort, they mentioned the possibility of outright retaliation, including tariffs on U.S. goods or the “nuclear option” digital service tariffs and tighter regulations on American tech firms though they warned this could trigger a full-blown trade war.

Despite the heightened pressure, expectations remain that both sides will eventually reach a deal.

Joerg Kraemer, chief economist at Commerzbank, predicted a compromise and estimated a final tariff rate around 15%, saying, “This is in the best interest of both the U.S. and the European Union.”

Berenberg economist Salomon Fiedler struck a more optimistic tone, maintaining the bank’s expectation of a 10% duty, though acknowledging that “the risks are now strongly skewed towards higher rates.”

Fiedler suggested Trump’s pattern of starting with extreme positions and then negotiating down leaves room for a deal.

He also noted that with rising import costs being passed to consumers and potential shifts in the domestic political landscape, Trump may be less inclined to follow through with the higher tariffs.

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