 "European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, File Photo/ Reuters")
The European Union has decided to delay imposing retaliatory tariffs on $25 billion (€21 billion) worth of US exports, a strategic pause aimed at keeping the door open for last-minute trade negotiations after President Donald Trump announced plans for 30 per cent tariffs on EU imports starting August 1.
The Financial Times reported European Commission President Ursula von der Leyen confirming that duties scheduled to take effect on July 14 would be postponed until early August, reflecting the Commission’s ongoing preference for a negotiated resolution with Washington.
Von der Leyen emphasised that the EU had always favoured a diplomatic solution over confrontation, highlighting the bloc’s willingness to avoid escalation for as long as meaningful talks remained possible.
Macron and Merz offer contrasting strategies
Despite the urgency, internal EU divisions have resurfaced over how best to approach the negotiations. French President Emmanuel Macron and German Chancellor Friedrich Merz have emerged as key voices offering contrasting guidance to the Commission.
Macron urged the Commission to accelerate preparations for potential retaliation. He signalled that France viewed a strong response as essential if no agreement could be reached by the August 1 deadline. In his view, the EU should be ready to mobilise all available tools, including the bloc’s anti-coercion instrument, should talks fail. Macron also reportedly called on the Commission to assert the EU’s determination to defend its economic interests with resolve and unity..
By contrast, Merz advocated a more cautious and pragmatic approach. German media reported that the chancellor held extensive conversations with von der Leyen and Macron over the weekend, and urged that the remaining two and a half weeks be used to seek a diplomatic breakthrough. He suggested that compromise was still possible and expressed his commitment to finding a solution.
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More ShortsEU officials sceptical Trump will act
Several EU officials reportedly expressed doubt that Trump would ultimately follow through with his threat. The Financial Times cited senior sources in Brussels as saying that they believed the 30 per cent tariff warning by US President Donald Trump was a negotiating tactic, designed to inflate leverage.
One official suggested that such steep measures could trigger negative reactions from US investors and argued that market pressure might deter the administration. The same official indicated that the EU was placing its faith in market forces to influence the White House’s final decision.
This sentiment seemed to shape the Commission’s strategy. While the first wave of countermeasures has been postponed, von der Leyen reportedly confirmed that preparations would continue for a broader second package targeting up to €72 billion in US goods. Nevertheless, she stated that the bloc was not prepared to invoke its anti-coercion tool at this stage, describing the situation as serious but not yet extraordinary.
France calls for tougher posture
Macron reportedly argued that the EU’s credibility depended on its ability to respond forcefully to external threats. He suggested that the recent US announcement, following weeks of what he viewed as good-faith EU engagement, warranted a firmer reaction. The French president was said to support intensifying negotiations, but only alongside firm preparations for retaliation if Trump’s threat materialised.
This approach reflected growing discontent among southern European leaders and industry groups. Coldiretti, Italy’s powerful agricultural association, warned that Trump’s proposed tariffs could devastate Italian food exports and result in losses estimated at €2.3 billion. Its president, Ettore Prandini, said if the Trump tariffs were implemented, the Commission’s strategy would be deemed failed, and the EU would be paying the price for a Germany-dominated trade policy, the Financial Times reported.
Germany warns against escalation
German officials and business groups, meanwhile, have cautioned against confrontation. Finance Minister Lars Klingbeil said in an interview that the EU should focus on serious and focussed negotiations. However, he acknowledged that if a fair deal could not be reached, the EU would need to take decisive steps to protect its economy, a Financial Times report said.
Germany’s automotive and steel industries have already been impacted by earlier rounds of US tariffs, and further escalation could deepen the economic fallout. The German Association of the Automotive Industry reportedly warned that the threat of a trade war posed real risks to manufacturers and suppliers, describing the current situation as deeply regrettable, The Guardian said in a report.
Other European leaders also urged caution. Italian Prime Minister Giorgia Meloni expressed hope that a fair agreement would be reached and implied that triggering a transatlantic trade war would be counterproductive.
Dutch Prime Minister Dick Schoof reiterated the importance of EU unity and insisted that the bloc must pursue a mutually beneficial solution. Ireland’s Deputy Prime Minister, Simon Harris, reportedly characterised Trump’s tariff threat as a familiar negotiating tactic and said it reflected the US president’s known approach to deal-making.
Diversification of trade ties continues
Amid the uncertainty, von der Leyen has moved to diversify EU trade ties beyond the United States. Over the weekend, she and Indonesian President Prabowo Subianto announced a political agreement on a free trade deal, bringing an end to nine years of negotiations. The agreement, expected to be ratified by member states and the European Parliament later this year, was hailed by EU officials as a strategic milestone, the Financial Times said.
Diplomatic sources suggested that Indonesia had come to view the EU as a more stable partner than the US, given Trump’s protectionist turn. The EU is also seeking to accelerate trade negotiations with India, Thailand, and other Asian economies in response to ongoing instability in the global trade system.
Von der Leyen reportedly stressed that the Indonesia deal was part of a broader strategy to expand trade opportunities beyond the transatlantic corridor. She indicated that diversifying the EU’s partnerships was key to insulating its economy from external shocks.
Trump’s threat seen as campaign tactic
Many in Brussels believe Trump’s 30 per cent tariff announcement is linked to his broader political strategy ahead of the US presidential election. Earlier in the year, Trump claimed the EU was unfairly taxing US goods at a rate of 39 per cent, a figure that EU officials have rejected, pointing instead to an average tariff of around 2.5 per cent.
White House economic adviser Kevin Hassett suggested on national television that the tariffs would be enacted if Trump were not satisfied with the final terms of any deal. He confirmed that negotiations were ongoing but warned that the administration was prepared to act if necessary.
Meanwhile, EU ambassadors convened in Brussels over the weekend to discuss the situation. Officials said the mood was tense but unified, with widespread support for the Commission’s plan to continue negotiations while preparing retaliatory steps in parallel.
Some members of the European Parliament have reportedly warned that appeasing Trump would set a dangerous precedent. Italian MEP Brando Benifei, a member of the Parliament’s International Trade Committee, argued that the EU must demonstrate resilience and show it would not be manipulated through threats.
A delicate balancing act
As the August 1 deadline looms, the EU faces the challenge of maintaining internal cohesion while preparing for potentially explosive fallout. Macron’s push for a bolder line and Merz’s insistence on pragmatism reflect deeper strategic debates within the bloc. Von der Leyen appears to be walking a fine line between these camps, pressing ahead with negotiations while ensuring the EU is not left vulnerable if talks fail.
Whether Trump proceeds with the tariffs or not, the EU’s response in the coming weeks will likely shape the trajectory of transatlantic economic relations — and its credibility — as a global trade actor.