Germany and France are pushing the EU to prepare retaliatory tariffs against the US

Germany and France are pushing the European Union to prepare retaliatory tariffs against the United States unless the White House agrees to drop a fresh round of trade penalties by August 1, according to the Financial Times.

Both countries have ramped up pressure on fellow EU governments to support hardline action as talks with the Trump administration stall. Until recently, Berlin had been urging patience and direct talks. That’s over. Officials now say they want a real threat on the table.

Germany’s Chancellor Friedrich Merz will host French President Emmanuel Macron in Berlin on Wednesday, a day after EU ambassadors were called into private meetings with European Commission officials to discuss the bloc’s strategy.

Those meetings, known in Brussels as “confessionals,” focused on whether the EU should activate the anti-coercion instrument (ACI), a policy mechanism designed to counter threats from foreign governments by targeting their companies directly.

ACI retaliation splits the EU as Germany reverses course

The ACI has never been used before. If triggered, it would allow the Commission to ban American companies from bidding on EU public contracts, cancel their intellectual property protections inside the EU, and freeze trade in specific sectors.

Both Germany and France back the plan. But not everyone’s sold. One diplomat said, “There is a silent majority against triggering the ACI.” Another added, “That would be nuclear. The situation is too fluid to gauge with any degree of certainty if member states favour it.”

Despite hesitation, things have moved fast. Officials say a recent letter from Trump warning of 30 percent reciprocal tariffs by August 1 flipped the tone across EU capitals. Until that point, tariffs were only set to rise to 20 percent. One EU diplomat said the letter “hardened the mood.” Another added, “Germany has turned 180 degrees in a few days,” saying most countries now want the EU to show it won’t fold without leverage.

If the Commission does go ahead with the ACI, the first step would be to launch a formal investigation into whether the US is using economic pressure against the EU. No immediate retaliation would follow. But if coercion is confirmed, then the Commission could move to impose penalties—with final sign-off coming from member states. One diplomat described it as “a calibrated response. It can be a bazooka but it can also be a sniper rifle.”

Two-stage tariff plan targets $100bn in US goods

Beyond the ACI, the Commission already has a more traditional response lined up. If Trump’s administration doesn’t back down by August 1, the EU will activate a set of tariffs on €21 billion worth of American imports. That package, which includes items like chicken and jeans, is scheduled to take effect on August 6.

That’s just the first wave. A second round, hitting €72 billion in US goods, including Boeing aircraft and bourbon, will be put to a vote on August 6 and could launch the very next day. According to two diplomats, the decision has already been mapped out, but officials still hope the US will blink before then. As one said, “Of course, they also hurt EU companies and no one wants to see a downward spiral of transatlantic trade.”

The Commission is also building a third list. This one targets American services, especially tech and digital sectors. A person involved in the talks said the plan includes taxes on digital services and online advertising revenue, a direct hit to big US platforms.

Meanwhile, Scott Bessent, the US Treasury Secretary, said in an interview with Fox News that “August 1st is a pretty hard deadline,” adding that tariffs would “boomerang back to the reciprocal level” if no deal is reached. Brussels officials say that the response made clear the US wasn’t open to compromise.

The conflict escalated further when Trump rejected a proposed framework deal that would have locked in the current 10 percent tariff rate. Instead, the US wants to hike that rate to a permanent minimum of 15 percent or more. The EU also asked for exemptions from a 25 percent levy on cars and car parts and a 50 percent duty on steel and aluminium. The US refused.

So far, no formal retaliation has begun. Olof Gill, spokesperson for the Commission’s trade office, said on Tuesday, “Until then, our laser focus is on negotiations and that will be our priority for the moment.” Whether Washington actually backs down before August is now the only thing that matters.

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