WASHINGTON – BRUSSELS | In a new escalation, U.S. President Donald Trump has granted the European Union a deadline until July 4th to implement what he calls a "historic trade agreement," warning that tariffs will be raised to "much higher levels" if the bloc fails to comply.
The threat was issued in a post on Trump's platform, Truth Social, following a phone call he described as "great" with European Commission President Ursula von der Leyen on Thursday. Trump claimed he had waited "patiently" for the EU to fulfill its commitments under the agreement, which he said the two sides reached in Turnberry, Scotland, adding that the European side had promised to reduce its tariffs to zero.
Deadline Tied to U.S. Independence Day
Trump stated that he agreed to give von der Leyen a deadline coinciding with America's 250th birthday celebrations, referring to July 4th. He warned that tariffs would be raised "immediately to much higher levels" if the EU does not adhere to the agreement.
This latest threat comes just days after Trump warned last Friday that he would raise tariffs on European cars and trucks to 25% this week, up from the current 15%, accusing the EU of not complying with the terms of the agreement reached last July.
Agreement in a Critical Phase
The trade agreement between the United States and the European Union is entering a decisive phase. While the European Parliament approved the agreement in March after amendments, it still requires negotiation and approval from member states to complete its implementation path.
Under the agreement, the EU agreed to eliminate tariffs on U.S. industrial goods in exchange for a 15% cap on most European products. However, Brussels insists that Washington has not complied with parts of the agreement, particularly after the United States expanded 50% tariffs on European steel and aluminum last August to include hundreds of new products.
For her part, von der Leyen has previously stated that the EU is in the "final stages of implementing the remaining tariff commitments," but she also noted that there are U.S. commitments that still need to be aligned with the agreed-upon cap.
European Concern, Especially in Germany
European capitals face a genuine dilemma between trying to maintain the trade agreement with Washington and avoiding a new trade war, while facing increasing internal pressure to respond to Trump's threats, especially if they target strategic sectors like automobiles, steel, and technology.
Germany is the European party most exposed to any tariff escalation. A raise to 25% would deal a heavy blow to the German automotive sector, led by companies such as Volkswagen, BMW, and Mercedes-Benz, at a time when the German economy is already suffering from prolonged slowdown.
The German Ifo Institute for Economic Research has warned that the dispute turning into a new trade war could push Germany into recession this year, especially as the automobile industry is one of the main pillars of the German economy.
European Divisions on How to Respond
In Berlin, German Finance Minister Lars Klingbeil stated that Europe "does not want any escalation" and is seeking a "common path with the Americans." Meanwhile, French Finance Minister Roland Lescure struck a more balanced tone, noting that there is an agreement being negotiated and that the EU is prepared to proceed in good faith.
However, France has also shown a tougher stance through its Trade Minister Nicolas Forissier, who affirmed that the EU has tools it can use if Trump makes "excessive" threats against strategic industries, emphasizing that Europe "will no longer be naive."
Europe's Response Tools
The European Union has several options to respond if Trump turns his threats into actionable decisions, including:
Suspending the trade agreement, either fully or partially.
Activating the Anti-Coercion Instrument (ACI) , nicknamed the "bazooka," which allows the EU to stop the flow of certain American products into the European market, exclude U.S. companies from public tenders, or impose duties on U.S. digital products. However, its application requires an investigation that could take up to three months.
Imposing counter-tariffs on U.S. products. Brussels has a ready-made list targeting American goods worth up to €93 billion (approximately $109.5 billion), including some 2,000 U.S. products. These include washing machines, refrigerators, snowplows, boats, agricultural products such as beef, poultry, dairy, sugar, vegetables, and almonds, as well as industrial products like textiles, leather goods, and home appliances.
Europe at a Crossroads
With the July deadline approaching, Europe finds itself at a crossroads: either make additional concessions to maintain the trade relationship with Washington, or enter a trade confrontation that could prove costly for both sides. In any case, the U.S. president appears determined to use trade as a primary lever of pressure, challenging the EU's ability to deliver a unified and decisive response in record time.