Following the threat letter from Trump, the EU's stance has become notably more resolute, with Germany's patience running out and quickly aligning with France's support for a hardline approach. Multiple EU diplomats have revealed that if no agreement is reached by August 1st and the U.S. proceeds with its planned tariff increases, the EU is almost certain to launch its first round of retaliatory measures on August 6th, imposing tariffs on approximately 21 billion euros worth of American products annually, and may, for the first time, activate the so-called 'trade nuclear weapon'—the Anti-Coercion Instrument (ACI).
August 1st marks a critical moment in the U.S.-EU trade war, with the EU taking a noticeably firmer stance. Germany and France are joining forces with other member states to support retaliatory measures against U.S. tariffs unless the U.S. makes concessions.
According to CCTV News, Trump announced on Saturday, July 12th, that starting from August 1st, a 30% tariff will be imposed on commodities imported from the EU.
On July 23rd, media reports citing informed sources indicated that as the Trump administration threatened to impose tariffs, Germany and France are jointly pushing the EU to adopt strong countermeasures and to use the unprecedented 'trade nuclear weapon'—the Anti-Coercion Instrument (ACI)—in preparation for a potential trade war. This marks a significant shift in the EU's trade strategy, moving from previous negotiations to a threat of a robust response.
Germany's attitude has undergone a 180-degree turn, preparing to take a hardline response.
A letter from Trump has pushed Germany onto the path of retaliation.
Germany had previously held hope for negotiations with the Trump administration, aiming to reduce U.S. trade barriers through dialogue.
Several diplomats pointed out that with Trump's letter to the EU this month, threatening to raise existing 10% tariffs to 30% starting from August 1st, this has instead intensified the member states' aversion, exhausting Germany's patience and rapidly shifting it towards the hardline approach supported by France. France had previously advocated for 'an eye for an eye,' imposing retaliatory tariffs on U.S. companies to gain leverage in negotiations.
An official stated: 'The letter has hardened the stance of many member states.' Another EU diplomat said: 'Germany has done a 180-degree turn in a few days, and most countries now want to bring something substantive to the table to increase their negotiating leverage.'
On Wednesday, German Chancellor Friedrich Merz will meet with French President Emmanuel Macron in Berlin.
The Anti-Coercion Instrument (ACI) faces activation.
EU trade policy is overseen by the European Commission. On Tuesday, senior officials held a 'secret meeting' to convene ambassadors from member states to discuss response strategies.
The central issue of the meeting was whether to activate the yet-to-be-used 'Anti-Coercion Instrument' (ACI), which is referred to as the EU's 'trade nuclear weapon.'
If the tool is activated, Brussels will have the authority to ban U.S. companies from participating in EU public procurement, revoke their intellectual property protections, and restrict imports and exports between the U.S. and the EU.
Germany and France are inclined to activate the 'Anti-Coercion Instrument' (ACI), but some member states are cautious, fearing it could provoke Trump.
An EU diplomat said: 'There is a silent majority opposing the triggering of ACI.' Another diplomat warned: 'That would be like using a nuclear weapon. In the current highly volatile situation, it is difficult to gauge whether member states truly support it.'
The European Commission will only proceed with this matter if it is certain of obtaining the support of a 'qualified majority' of member states.
Diplomats emphasized that initiating the ACI is merely the start of an investigation process and does not immediately lead to countermeasures. If the Commission determines that the United States is engaging in coercive behavior toward the EU, it will then recommend countermeasures, which must be approved by the member states. As one diplomat put it: 'This is a measured response. The ACI can be a cannon or a sniper rifle.'
EU's three rounds of retaliatory measures are ready
According to media reports last Friday, Trump rejected a framework agreement that would have 'locked in' the current 10% reciprocal tariff level as the norm. Trump prefers to set a permanent minimum tariff of 15% or higher. Additionally, the EU hopes to secure partial exemptions from the US's 25% industry-wide tariffs on Cars and parts, as well as the 50% tariffs on Aluminum and steel.
US Treasury Secretary Scott Bessent stated on Tuesday that August 1st is a very clear deadline, and if no agreement is reached by then, US tariffs will revert to the reciprocal level.
Several diplomats revealed that if the US proceeds with its planned tariff increase, the EU is almost certain to initiate the first round of retaliatory measures on August 6th, imposing additional tariffs on approximately 21 billion euros worth of US products, including chicken and jeans.
The second round of retaliation will cover approximately 72 billion euros worth of US products, including Boeing aircraft and bourbon whiskey. Two diplomats stated that this plan will be voted on before August 6th, and once approved, it will take effect the next day. According to a CCTV report on Thursday, if the US-EU trade negotiations fail, the EU is prepared to impose additional counter-tariffs on 72 billion euros worth of US imports.
However, they also stressed that these measures are a last resort. One diplomat said: 'These tariffs will, of course, also harm EU businesses, and no one wants to see trans-Atlantic trade enter a downward spiral.'
Meanwhile, the European Commission is preparing a third round of lists, targeting the service sector for countermeasures. An informed source revealed that the proposed measures will include taxing digital services and online advertising revenue.
Olof Gill, the European Commission's spokesperson on trade affairs, stated that any countermeasures will not be implemented before August 1: 'Until then, our focus is on negotiations, which will be the top priority at present.'
Editor/Melody