EU Proposes Zero Tariff Agreement to US While Bracing for Potential Trade Conflict | International Trade News

Brussels seeks trade talks with Washington while preparing countermeasures on tariffs.

The European Union has expressed its willingness to negotiate a tariff-free trade agreement with the United States but has also indicated it is prepared to retaliate if necessary.

Trade ministers met in Luxembourg on Monday to discuss the bloc’s response to U.S. tariffs on steel and aluminum, with most agreeing that initiating talks to avoid a full-blown trade war should be the priority.

Following the meeting, EU Trade Commissioner Maroš Šefčovič told reporters that the bloc’s countermeasures would be adjusted after considering feedback from member states. “When it comes to steel, aluminum, and derivatives, we are talking about 26 billion euros [$28 billion],” he said. “We are finalizing the list tonight, but I can tell you that it will not reach the level of 26 billion euros, as we’ve been listening very carefully to our member states,” Šefčovič added.

European Commission President Ursula von der Leyen had earlier stated that the EU was prepared to negotiate a “zero-for-zero” tariff agreement on industrial goods. However, the bloc confirmed it would begin imposing retaliatory duties on selected U.S. imports next week.

“Sooner or later, we will sit at the negotiation table with the U.S. and find a mutually acceptable compromise,” Šefčovič said at a news conference.

He added that the first round of EU tariffs on U.S. goods would take effect on April 15, with a second wave set for May 15, in direct response to Washington’s duties on European steel and aluminum.

Escalation is on the table

While the EU’s preference remains negotiation, Šefčovič warned that the bloc is ready to escalate its response if necessary. This could include invoking the Anti-Coercion Instrument (ACI), which would allow the EU to restrict U.S. companies’ access to public contracts or target American services.

However, some EU countries, particularly those heavily reliant on trade with the U.S., urged caution. Irish Foreign Minister Simon Harris described the ACI as “very much the nuclear option” and said he believed most EU countries were not ready to consider it, at least for now.

The EU faces 25 percent U.S. tariffs on steel, aluminum, and cars, along with 20 percent duties on nearly all other goods under former U.S. President Donald Trump’s protectionist policies.

In a tariff war, Brussels has less room to maneuver than Washington, given that EU goods imports from the U.S. totaled 334 billion euros ($366.2 billion) in 2024, compared to 532 billion euros ($582.1 billion) of EU exports to the U.S.

Dutch Trade Minister Reinette Klever urged restraint, warning that immediate escalation could further disrupt markets. “We need to remain calm and respond in a way that de-escalates. The stock markets right now show what will happen if we escalate straightaway. But we will be prepared to take countermeasures if needed to get the Americans to the table,” Klever said.

Despite the EU’s measured approach, its planned tariffs remain contentious.

Trump has already threatened a 200 percent counter-tariff on EU alcoholic beverages if the bloc proceeds with a proposed 50 percent duty on U.S. bourbon. The move has raised concerns in France and Italy, key exporters of wine and spirits.