What: EU crafts targeted response to US steel and aluminum tariffs through a calculated €22 billion retaliation plan focused on specific American exports.

Why it is important: The carefully structured retaliation plan reflects a sophisticated understanding of global trade dynamics, targeting specific sectors while maintaining pathways for diplomatic resolution.

The European Union has unveiled a strategic response to US tariff increases, demonstrating a sophisticated approach to trade diplomacy. The plan involves implementing a 25% tariff on selected US exports worth €22 billion, structured in three distinct phases. The initial phase, targeting approximately €3.9 billion in goods including fruit juice, rice, textiles, and motorcycles, reflects careful product selection. Following the announcement, both parties agreed to a 90-day negotiation period, with the EU suspending its retaliatory measures. The selection criteria emphasise four key factors: import value, alternative sourcing availability, US production locations, and potential impact of US counter-measures. This measured approach extends beyond traditional trade tools, incorporating the possibility of using the anticoercion instrument to address services and intellectual property rights, particularly significant given the US services trade surplus with the EU.

IADS Notes: The EU's tactical response emerges against a backdrop of significant global trade transformations. In early March 2025, BCG's analysis projected $640 billion in additional US import costs from expanded tariffs, contextualising the EU's measured €22 billion response. This strategic approach aligns with broader market shifts seen in mid-February 2025, when the elimination of the $800 de minimis rule demonstrated how targeted regulatory changes could effectively reshape trade dynamics. The EU's careful product selection strategy gains particular relevance considering BCG's mid-January 2025 forecasts of dramatic shifts in global trade patterns through 2033, suggesting the need for adaptable, long-term policies. Consumer sentiment data from late March 2025, showing 62% of consumers concerned about rising retail prices, validates the EU's focus on products with alternative sourcing options to minimise consumer impact.

Behind the EU’s tactical response to US tariffs