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Germany and France gather colleague -members to support retribution against American rates, unless Washington is in danger because the position of the block is hard for a deadline of 1 August for a trade agreement.
Berlin, who had previously urged to negotiate with Donald Trump’s government to reduce the barriers to the export of the US president, now wants to threaten a strong reaction, say people who are familiar with his thinking.
It has bundled the forces with Paris, who had long argued for obtaining leverage about Trump by hurting American companies through retaliation rights.
The German Chancellor Friedrich Merz will organize French President Emmanuel Macron in Berlin on Wednesday.
“We have to change our negotiating method. We must be able to take revenge and put every option on the table that would change the balance of the negotiation,” said the French Minister of Industry Marc Ferracci on Monday in Berlin, prior to a meeting with his German counterpart Katherina Reiche.
High officials of the European Commission, who run trade policy, met the ambassadors of the EU member states for so-called ‘confessionals’ on Tuesday.
The most important question is whether the block should prepare the Anti-Coercion instrument (ACI) so-called Handelsbazooka. Never used to use the Brussels play space to block American companies for public tenders, to withdraw the protection of intellectual property and to limit import and export.
Germany and France are in favor of using the ACI, but some Member States are careful with the reaction it could cause Trump.
“There is a silent majority against activating the ACI,” said an EU diplomat.
A third diplomat warned: “That would be nuclear. The situation is too smooth to gauge with some certainty if the Member States benefit.”
The committee would only continue if it knew for sure that it had a weighted majority of the Member States in support.
Various other diplomats said that this month’s letter from Trump threatened the ‘reciprocal’ rates of 30 percent from 1 August, had stiffened the resistance. Until that time, rates had risen to 20 percent from August compared to the current level of 10 percent.
“The letter has hardened the vote among the Member States,” said one.
“Germany became 180 degrees in a few days,” said another, and added that most countries “want something on the table to get leverage”.
They emphasized that activating the ACI would simply cause an investigation, not with immediate measures. If the Commission forced the US to force the EU, the retribution would recommend that the Member States approved.
“It is a calibrated reaction. It can be a Bazooka, but it can also be a sniper rifle.”
The FT reported on Friday that Trump also rejected a framework agreement that would lock the current 10 percent mutual rate in favor of a permanent minimum rate of 15 percent or higher.
The EU also wants some exemptions from the 25 percent sectoral tax on cars and car parts, and 50 percent duty on steel and aluminum.
Scott Bessent, Finance Minister, said FOX News on Tuesday that “August 1 is a fairly hard deadline” after which rates “Boomerang would return to the reciprocal level”.
In that case, diplomats say that the EU would almost certainly unleash its already approved package of rates at € 21 billion in annual American import, including chicken and jeans, on 6 August.
A second retention strike at € 72 billion in annual American import, including Boeing aircraft and Bourbon, will be voted on on 6 August and will be taken into operation the next day if it is approved, according to two diplomats.
They would be a final resort, the diplomats said.
“Of course they also harm EU companies and nobody wants to see a downward spiral of transatlantic trade,” someone said.
The committee also prepares a third list for measures against services. A person who is familiar with the newest proposal said that it would include levies about digital services and online advertisement income.
Olof Gill, spokesperson for the committee, said that all countermeasures would not come before August 1. “Until then, our laser focus is on negotiations and that will be our priority at the moment.”
Additional reporting by Anne-Sylvaine Chassany in Berlin
