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EU faces first test of fragile trade truce with Trump

BRUSSELS — The ink is still drying on a leaders’ statement formalizing a tariff deal between the EU and the United States, and President Donald Trump is already threatening to tear it up. 

In another punch against the EU, Trump threatened Monday to impose further tariffs on countries whose digital rules, in his view, discriminate against American companies.  

“I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A., and institute Export restrictions on our Highly Protected Technology and Chips,” he wrote on Truth Social.

The Trump administration has fired shot after shot against the EU’s digital rule book — claiming that the Digital Services Act and the Digital Markets Act, respectively, censor American citizens and unfairly target U.S. companies.  

The European Commission was quick to stress its regulatory autonomy. 

“It is the sovereign right of the EU and its member states to regulate economic activities on our territory, which are consistent with our democratic values,” the EU’s chief spokesperson Paula Pinho told reporters Tuesday.  

Trump’s new threat, however, challenges the EU’s logic that a joint statement published with the U.S. last week provides industry with crucial predictability. 

“This is a further indication that the so-called deal of July 27 does not bring security and stability,” said Bernd Lange, a lawmaker with the Socialists and Democrats who chairs the trade committee in the European Parliament.  

As Trump and Commission President Ursula von der Leyen shook hands on the deal in Scotland at the end of July, many saw it as an act of surrender by the EU. Chiefly, the EU agreed to scrap tariffs on all U.S. industrial goods in exchange for a 15 percent baseline tariff, which would also apply to cars that now face a 27.5 percent levy. 

This, Brussels argued at the time, was a price worth paying to shield the EU — and its regulatory autonomy — from future escalation from the mercurial Trump administration. 

“I can only repeat, and stress how much we’ve worked to ensure that we are not touching in any way our legitimate digital regulation. That includes, of course, the Digital Markets Act, as well as the Digital Services Act, as well the digital services taxes of our member states,” a senior EU official told reporters last week after the EU executive unveiled its joint statement with the U.S.  

Less than a week on, the EU is finding out the hard way that Trump’s commitments can quickly be overtaken by his ever-shifting priorities.  

“Deals with the Trump administration simply do not create the kind of lasting certainty everyone is desperate for, because certainty, predictability and strict fidelity to treaties are not White House objectives,” said Dmitry Grozoubinski, a former trade diplomat and author of the book “Why Politicians Lie About Trade.”

“Given the public interest in digital regulation, the suspicion of U.S. tech giants, and how quickly this extortion is coming after what was supposed to be a glorious trade peace across the Atlantic — this may be a bridge too far for Europe,” he added.  

The Commission pushed back against that interpretation.  

“We believe that this deal indeed has provided for predictability and stability,” Pinho told a news briefing. 

Retaliation mojo  

In the final stages of its negotiations with the Trump administration, Europe’s appetite to retaliate against Washington faded, with capitals desperate to keep Trump focused on ending the war in Ukraine.  

“We prepared [countermeasures],” Sabine Weyand, the EU’s top trade official, told a panel at the European Forum Alpbach on Monday before Trump’s latest announcement. “But, of course, this requires you to be ready to accept the cost that is associated with countermeasures and to accept that is linked to further escalation. There was clearly no appetite for that. And, as I said, the overwhelming point was Ukraine and the U.S. security guarantees.” 

Trump’s latest move could, however, put pressure once again on the EU executive and member countries to respond. One option would be to take countermeasures — which would impose tariffs on €93 billion in U.S. goods ranging from aircraft to autos, and from soybeans to Kentucky bourbon — out of the freezer.  

Another — which some are already calling for — would be to deploy its Anti-Coercion Instrument. This “trade bazooka” foresees potentially broad action in response to trade blackmail.

“In my opinion, this is clearly a case for the AC instrument,” said Lange. 

Pinho, asked directly about the Anti-Coercion Instrument, declined to speculate. 

Up next  

The EU’s weakness in negotiating with Trump contrasts with Beijing’s more aggressive strategy.

Capitalizing on its near-monopoly on rare earths, China in April imposed export restrictions on the critical minerals — Trump earlier this month extended a tariff truce with China for another 90 days, setting the stage for broader negotiations between the world’s two biggest economies. 

Its strategic weaknesses in sectors ranging from military to technology condemns the EU, however, to reactionary limbo in its dealings with the U.S.  

On Wednesday, the Commission is expected to put forward its proposals to lift tariffs on U.S. industrial goods and cars.  

According to the joint statement, the U.S. will lower its 27.5 percent tariffs on cars and automotive parts to the baseline 15 percent only after the EU proposes legislation to eliminate tariffs on all U.S. industrial goods. If the Commission goes ahead with the proposal, the tariff relief would apply retroactively from Aug. 1. 

“We will proceed with the implementation of the framework agreement,” said Pinho.

Sarah Wheaton contributed reporting.

LP Staff Writers

Writers at Lord’s Press come from a range of professional backgrounds, including history, diplomacy, heraldry, and public administration. Many publish anonymously or under initials—a practice that reflects the publication’s long-standing emphasis on discretion and editorial objectivity. While they bring expertise in European nobility, protocol, and archival research, their role is not to opine, but to document. Their focus remains on accuracy, historical integrity, and the preservation of events and individuals whose significance might otherwise go unrecorded.

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