Trump 'Turns Up The Heat': Proposes 15%-20% Minimum Tariff On All EU Goods
The US and EU remain locked in a tense standoff over tariffs. Citing multiple sources, the Financial Times reported on July 19th that US President Donald Trump has escalated demands in negotiations, insisting on setting a minimum tariff of 15% to 20% on all EU goods in any deal, severely testing the EU's tolerance limits. In previous weeks, the EU-US negotiations had aimed to maintain a baseline tariff rate of 10% for most goods.
Sources also stated that Trump showed no interest in the EU's latest proposal for mutual reductions in auto tariffs, preferring to maintain the 25% tariff on European cars. Analysts believe the likelihood of a US-EU trade deal being reached before August 1st is fading.
Separately, European officials indicated that the EU is preparing a "four-pronged strategy" to counter Trump's tariffs, including: sincere negotiations, preparing countermeasures, coordinating with other nations, and boosting European competitiveness.
Trump had announced in early April that he would impose a 20% "reciprocal tariff" on EU goods. On July 12th, he formally notified the EU of his intent to raise this tariff to 30%, effective August 1st. The EU is also already subject to existing US tariffs of up to 50% on steel and aluminum, and 25% on cars.
The EU's chief trade negotiator, Maroš Šefčovič, briefed EU officials on July 18th about recent talks in Washington. Two sources familiar with the meeting described his assessment as pessimistic.
A US official told the Financial Times that even if a deal were reached, the "reciprocal tariffs" within such agreements would likely be higher than 10%.
As EU member states grow increasingly pessimistic about the prospects of a deal, German Chancellor Olaf Scholz warned on the 18th that the US response to the EU's proposals for lowering sectoral tariffs had been lukewarm.
Scholz stated: "Whether we can still set sectoral rules, whether we can treat some sectors differently from others, remains an open question. The EU side is in favor of this, the US side is more cautious."
A senior EU diplomat indicated that if Trump insists on a permanent "reciprocal tariff" of 15% to 20%, it would be little better than the 20% tariff announced in early April and could prompt the EU to implement countermeasures.
"We do not want a trade war, but we do not know if the US will leave us any choice," the EU official said.
Another EU diplomat added, "The mood has clearly shifted towards favouring retaliation," and "We will not accept 15% tariffs."
The EU has drafted several counter-tariff schemes but has repeatedly delayed their implementation. Earlier this year, the EU approved the first round of counter-tariffs targeting €21 billion worth of US goods, but their application was suspended until August 6th to allow time for talks.
On July 14th, the European Commission proposed a second round of countermeasures, covering goods such as aircraft, cars, machinery, and agricultural products valued at €72 billion, pending approval.
Despite Trump's renewed tariff threats, European countries remain divided on whether to further increase their bargaining chips in negotiations with the US.
According to one EU national official, current internal EU discussions are still "precautionary" in nature, aimed at preventing a breakdown in talks before the deadline. "The basic principle is, if there is no deal in the end, don't wait until the last moment to ask what to do."
Facing Trump's tariff threats, the EU intends to defuse the situation using its "four tactics."
Polish Deputy State Secretary for Economic and Technological Development, Michał Baranowski, told CNBC that the EU is implementing a four-step strategy in its efforts to reach a deal.
"Step one is to conduct sincere negotiations with US officials."
"Step two, if no deal is reached, we prepare countermeasures. We have countermeasures for both the steel and aluminum tariffs and the so-called 'reciprocal tariffs' involving €72 billion."
"Step three is consultations with other countries also affected by US tariffs. It's not formal coordination, but we want to know the positions of other countries because they are, more or less, on the same side in negotiations with the US."
"Step four, we are comprehensively enhancing Europe's competitiveness."
EU data shows the US-EU relationship is the world's largest bilateral trade and investment partnership, accounting for nearly 30% of global trade in goods and services and contributing 43% of global GDP.
In 2024 alone, US-EU trade reached €1.68 trillion, equivalent to approximately €4.6 billion per day in trade flows.
Baranowski stated that the EU is the US's "most important economic partnership," and the EU-US trade relationship is vital for both sides, with "comparable stakes for both."
A key element of the EU's negotiation strategy, CNBC noted, is the proposal for reciprocal reductions in auto tariffs.
The Financial Times reported on July 17th that the EU is prepared to lower its 10% tariff on US car exports, provided the Trump administration reduces its tariff on European cars below 20%.
Earlier this year, Trump imposed a 25% tariff on foreign-made vehicles, dealing a heavy blow to European carmakers. For example, Sweden's Volvo reported a significant drop in operating profit for Q2 2025.
Unlike the persistent deficit in goods trade, the US maintains a longstanding surplus with Europe in services trade. Politico Europe views this surplus as a potential "Achilles' heel" for the US should friction escalate. In fact, within the EU, the option of targeting the services sector has already been discussed, though it was previously shelved due to hopes for a preliminary deal.
Countries like France have been urging Brussels to take a tougher stance in negotiations with the US. French President Emmanuel Macron even called for deploying the EU's most potent "Anti-Coercion Instrument (ACI)" to target US services trade. The ACI would allow the European Commission to restrict US companies' participation in EU public procurement or further regulate how large tech companies operate within the EU.
