The EU is prepared to deal with US tariffs: intensify negotiations on one hand and plan counterattacks on the other.

The negotiators from the European Union and the United States are about to start another round of intensive negotiations, hoping to reach a trade agreement before August 1. At the same time, EU diplomats may hold a meeting this week to develop a contingency plan in case of a "no-deal" scenario with the Trump administration. The Trump administration's tariff policy has become increasingly tough as the August 1 deadline approaches. Reportedly, all parties strongly favor keeping the negotiation process with Washington smooth in order to break the deadlock before the end of next month. US and EU Accelerate Trade Negotiations Officials in Brussels stated that they are willing to accept an agreement that is necessary to break the deadlock and is beneficial to the United States. However, the report said that last week's talks in Washington failed to make substantive progress. Discussions will continue in the next two weeks. Meanwhile, US Commerce Secretary Howard Lutnick said on Sunday that he believes the US and the EU can reach a trade agreement before the upcoming tariffs take effect. He also emphasized that the August 1 deadline remains unchanged. President Trump announced on July 12 that if a final agreement cannot be reached, the US will impose a 30% tariff on imported goods from the EU and Mexico starting on August 1. The sources revealed that the US is currently trying to implement a nearly comprehensive high tariff policy on EU goods, with rates exceeding 10%. The number of exempted items is decreasing, limited to the aviation industry, certain medical devices, generic drugs, a few types of spirits, and a specific batch of manufacturing equipment required by the US. The sources stated that discussions have also taken place on potential ceilings in certain industries, quotas for steel and aluminum, and how to isolate supply chains from oversupplied metals. They cautioned that even if an agreement is reached, it would still require President Trump's approvaland his stance is still uncertain. The European Commission, responsible for EU trade affairs, stated that they have no comment on the ongoing negotiations. Lutnick said on Sunday: "I am confident we will reach an agreement. I think all of these important countries will understand that opening markets to the US is much better than paying high tariffs." Lutnick added that he had a conversation with European trade negotiators earlier on Sunday. Trump's Letter Crushes EU's Optimism Earlier this month, Trump sent a letter to the EU warning that starting on August 1, the EU would impose a 30% tariff on most US exports. Besides the universal tariffs, Trump also plans to impose a 25% tariff on cars and car parts, and double the tariffs on steel and aluminum. He also threatened to implement new tariffs on drugs and semiconductors next month, and recently announced a 50% tariff on copper. Overall, the EU estimates that US tariffs already cover 380 billion (approximately $442 billion) of its exports to the US, accounting for about 70% of its exports to the US. Before Trump sent the letter, the EU had been hopeful that they were gradually approaching a preliminary framework that would allow detailed discussions on most of the group's export items with a unified 10% tax rate. The EU has been seeking broader exemptions than those offered by the US, and also hopes to protect the EU from future tariffs in various industries. Although it has long been believed that any agreement would be favorable to the US and exhibit a certain degree of imbalance, the EU will assess the overall imbalance of any agreement before deciding on any remedial measures. Insiders said that different member states have different tolerances for imbalances, with some countries stating that they would accept higher tariff rates if they could obtain sufficient exemptions. Any agreement will also cover non-tariff barriers, economic security cooperation, digital trade negotiations, and strategic procurement. Potential Retaliatory Measures Quickly imposing tariffs on US goods Sources said that as the possibility of a positive outcome becomes increasingly slim and the deadline approaches, the EU is expected to begin formulating a plan for swift action if no agreement is reached. They also said that any decision to take retaliatory measures may require political approval from EU leaders, as it is a significant issue. Substantive countermeasures are likely to trigger wider transatlantic trade conflicts, as Trump has warned that retaliatory actions against US interests will only lead to more severe measures from his administration. The EU has already approved potential tariffs on 21 billion worth of US goods, which can be swiftly implemented in response to Trump's metal tariff measures. These tariffs target politically sensitive US states and products include soybeans from Louisiana (the home state of House Speaker Mike Johnson), other agricultural products, poultry, and motorcycles. The EU has also drawn up a list of 72 billion worth of US products on which tariffs could be imposed in response to what Trump calls equivalent taxation measures and car tariffs. These tariffs will target industrial products, including Boeing aircraft, US-made cars, and Bourbon whiskey. The EU is also considering potential measures beyond tariffs, such as export controls and restrictions on public procurement contracts. "Anti-Coercion Tools" Last week, reports in the media indicated that more and more EU member states are hoping the EU will use its most powerful trade toolthe so-called "Anti-Coercion Instrument" (ACI)if an acceptable agreement cannot be reached and if Trump follows through on his tariff threats. The ACI would give officials broad powers to take retaliatory measures. These measures could include new taxes on US tech giants, targeted restrictions on US investments in the EU, restricting access to certain EU markets, or prohibiting US companies from bidding on public contracts in Europe. The main purpose of the mechanism is to serve as a deterrent, while also serving as a response to third countries that intentionally use coercion (using trade measures to pressure a union of 27 member states or individual member states' sovereign policy choices). The European Commission can propose the use of the ACI, but the decision to use the mechanism rests with the member states, based on whether there is a coercive situation and if the mechanism should be activated. Throughout the process, the EU will seek consultation with the coercing party to find a solution. Last Friday, member states were briefed on the progress of trade negotiations with the US.