The EU plans to impose tariffs of 95 billion euros on the US, escalating the trade conflict.

As the US-EU trade dispute continues to heat up,agea foreign exchange the European Commission issued a significant signal on May 8, announcing that if the current dispute cannot be resolved through negotiations, the EU will consider imposing retaliatory tariffs of up to 95 billion euros (about 107.2 billion USD) on American goods. This figure not only marks a historical peak in EU countermeasures against the US, but also indicates that transatlantic trade relations could face their most severe challenge in two decades.

The precise list of retaliatory measures targets American products with precision. Leading the list are American bourbon and wine, cultural symbols of the US, which might face hefty tariffs. Additionally, the list targets American industrial strongholds such as aircraft, automobiles and parts, and chemicals. The inclusion of the aircraft sector evidently continues the long-standing Boeing and Airbus dispute. Furthermore, healthcare products and electrical equipment, crucial consumer goods, are also part of the EU's retaliation list, showcasing the EU's "offensive and defensive" strategy in dealing with trade disputes.

European Commission President Ursula von der Leyen stated in a declaration that the EU remains committed to resolving issues through negotiations but hinted that the time for negotiations is not indefinite. With the public consultation period nearing on June 10, EU countries are accelerating their stance coordination to prepare for a potential trade conflict. This urgency stems from the US government's "final ultimatum" — the 90-day tariff suspension on EU goods will formally expire on July 8, at which point EU tariffs could significantly increase, potentially rising from the current 10% to 20%.

The scale of this tariff retaliation far exceeds previous measures, reflecting the worsening US-EU trade relations. Data shows existing US tariffs cover 380 billion euros of EU goods, representing 70% of EU exports to the US. Should the US initiate new investigations into other sectors such as pharmaceuticals and semiconductors, this proportion might reach 97%.

Amid these tensions, concerns within the European business community have become more pronounced. Statements from companies like BMW and those in the spirits industry noted that a trade war would severely impact traditional industries with well-established supply chains, particularly high-value-added sectors such as automotive and spirits.

However, the toughest obstacle for the EU is that the scale of goods it imports from the US is far less than its export scale to the US. This discrepancy means that even implementing 95 billion euros worth of countermeasures might not achieve a true "reciprocal retaliation." Therefore, the EU might adopt more flexible strategies, including export restrictions and filing complaints with the World Trade Organization (WTO).

Nonetheless, remarks from US Vice President Vance offered a turning point. He indicated that US-EU negotiations are ongoing and urged the EU to lower tariffs and regulatory barriers. Such a statement suggests that the US might consider exchanging market openness for tariff reductions, offering some room for compromise.

As the July 8 deadline approaches, the future trajectory of US-EU trade relations becomes increasingly critical. Whether it results in a full-scale trade war or a negotiated compromise will not only affect the prospects of these two economic powers but could also have profound implications for the global trade system. In the coming weeks, every step in negotiation progress will become a focal point for global market attention.

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