BRUSSELS — The European Commission is considering a new round of retaliatory measures against U.S. President Donald Trump’s sweeping tariffs that would impose curbs on trade in services and procurement.
Trade Commissioner Maroš Šefčovič floated the idea during a meeting of EU trade ministers on Monday, and said that preparatory work was under way for measures other than goods, four EU diplomats told POLITICO.
“It’s clear they need to start looking at services as we have more or less exhausted ourselves on goods. And if Trump comes with more bombshells like pharma and semiconductors, we need to have something to hand,” said one of the diplomats, who like others cited in this story were granted anonymity to talk about the closed-door discussion.
However, the idea met a cautious response from EU countries, the diplomats said. A majority is concerned about what exactly would be targeted, and whether this could trigger further reprisals from Washington, just as the two sides try to hammer out an agreement that would spare Europe from a 30 percent import tariff on all its goods.
A first round of retaliatory tariffs, targeting €21 billion in U.S. exports, has already been approved but suspended until Aug. 6 to allow time to negotiate a deal. The Commission has proposed a second package — covering €72 billion in items such as aircraft, autos, machinery and farm produce — which awaits a green light.
America’s big transatlantic trade surplus in services — which contrasts with its chronic deficit in goods — could be its Achilles’ heel should things escalate. Targeting services has been an ongoing discussion within the bloc — but was temporarily put on the back burner as hopes rose that a preliminary agreeement was within reach.
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Eye to eye?
European capitals still don’t see eye to eye on whether to raise the stakes further with Washington, after Trump threatened to triple tariffs on the bloc from the current 10 percent from Aug. 1.
One national official said that the discussion aimed at preparing the ground in case there’s no deal by that date. “Basically, if there’s no deal, don’t wait until you’re up against the wall to ask yourself the question,” they said.
Countries such as France have been pushing for Brussels to get tougher on Trump, with President Emmanuel Macron going as far as calling to invoke its Anti-Coercion Instrument — an all-purpose trade “bazooka” that could be deployed to target services.
Using the tool — which would require backing from 15 out of the EU’s 27 member countries — would allow Brussels to impose several measures, for instance restricting American companies’ ability to participate in the EU’s public markets, or turning the screw on how Big Tech operates in the bloc.
Diplomats said there was little appetite from countries to go down that road so far.
During Monday’s ministerial meeting, Šefčovič said the Commission was rather looking at using its Enforcement Regulation, two of the diplomats said. This is a law that was strengthened in 2021 and enables the EU to exclude companies from public tenders if breaches by partners in trade agreements harm its commercial interests.
“There was the discussion of [how] we have the first list, now we have the second list, and whether we should have a third list of the different measures,” Lithuanian Foreign Minister Kęstutis Budrys told POLITICO after Monday’s meeting.
The European Commission declined to comment.
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