Just the Facts | How is the EU’s response to US tariffs decided?

On Wednesday 2 April, United States (US) President Donald Trump announced a swathe of tariffs on global imports, signalling a paradigm shift in the global trading system. He declared a baseline 10% tariff on all imports globally, with a range of targeted tariffs for particular countries – from 11% on Cameroonian imports, for example, to 34% on Chinese imports. As part of this, the European Union (EU) was issued with a 20% tariff, set to come into effect on 9 April. Additionally, the EU is affected by President Trump’s current 25% blanket tariff on steel and aluminium imports, announced in February, as well as on all car imports, which was imposed on 26 March. However, after one week of turmoil which saw the US stock markets have their worst one-day falls since the beginning of the Covid pandemic in 2020, the White House announced an abrupt U-turn on Wednesday 9 April. Effective immediately, President Trump declared a “90-day pause” and a lowered “Reciprocal Tariff” rate of 10% for the countries that have not “retaliated in any way, shape or form against the US”. 

On 9 April, a few hours earlier on the same day as Trump’s U-turn, EU Member States voted in favour of imposing what are known as “countermeasures” in response to the US tariffs on steel and aluminium, the first round of which were due come into effect on 15 April. However, on 10 April, European Commission President Ursula von der Leyen announced that the EU’s countermeasures will be “on hold” for 90 days, pending the outcome of negotiations with the US. As these measures had not taken effect by the time of Trump’s U-turn, a White House official confirmed that the “substantially lowered Reciprocal Tariff” of 10% will apply to the EU. However, the 25% tariffs on steel, aluminium and car imports from the EU still remain. 

But how does a bloc of 27 Member States take collection action on this issue? What is the procedure and in whose hands – or with which institution – does the primary responsibility lie? This Just the Facts gets technical on tariffs and delves into the details of EU decision-making.  

EU-US trade relations 

The US is the EU’s most significant trade partner, and their transatlantic commercial relationship is one of the most important in the world. In 2023, EU-US trade in goods and services reached €1.6 trillion. This means that, each day, €4.4 billion worth of goods and services cross the Atlantic back and forth between the EU and the US. In 2023, the EU had a trade surplus when it came to goods (€48 billion overall) and the US had a surplus (€109 billion overall) when it came to services. The EU’s surplus represented 3% of the €1.6 trillion trade flow.  

So far, President Trump’s tariffs extend only to goods, and not to services. In fact, the goods that were part of the “reciprocal” tariffs represent €380 billion worth of EU goods exports to the US. This means that approximately 70% of total EU goods exports to the US are facing tariffs of 20% or 25% (if tariffs resume after the 90-day pause), or even higher when combined with existing Most Favoured Nation tariffs (MFN). This would represent over €80 billion in duties – an elevenfold jump from the €7 billion the US currently collects from the EU. 

The EU makes up 13% of total global goods trade and so, while the US has decided to step back from parts of the global trading system, that system is still crucial for the EU and the rest of the world. 

EU trade policy – whose mandate is it? 

Trade policy is an exclusive competence of EU. By acting together as one, EU Member States benefit from strengthened negotiating power in the global trading system, which has resulted in the bloc becoming the largest trader in the world, ahead of China and the US. This competency is enshrined in Article 3 of the Treaty on the Functioning of the European Union (TFEU), also known as the Lisbon Treaty, which was accepted by the Irish electorate via referendum in 2008. This competency means that it is the EU, rather than its Member States, that represents in trade negotiations and legislates on international trade agreements and other general trade-related issues. This includes the area of tariffs (Article 31 TFEU) on the import of goods from non-EU countries. Under the Common Customs Tariff, “duties shall be fixed by the Council on a proposal from the Commission”. The European Parliament does not play a formal role for individual duties but can adopt resolutions and co-legislates on the underlying legislative framework of trade under the ordinary legislative procedure. 

The European Commission plays a central role in EU trade policy on account of it being an exclusive EU competence. The Commissioner for Trade and Economic Security, Maroš Šefčovič, is currently the EU’s chief trade negotiator. Additionally, the EU’s deputy chief negotiator is the head of the Directorate General for Trade and Economic Security, Sabine Weyand. The chief communicator, or spokesperson, on the EU’s trade policy is Olof Gill.  

Reverse qualified majority voting 

In response to tariffs, the European Commission does not need unanimous support to implement trade policy. However, EU Member States have retained the power to block the Commission’s proposals when it comes to the most important decisions, such as the imposition of definitive duties. This is known as the Comitology procedure. Member States in the Council of the EU (the institution composed of national ministers from each EU country) can only block Commission proposals with a qualified majority against the policies. This is known as reverse qualified majority voting. Under the reverse qualified majority voting system in the Council, the proposal would need to be blocked by at least 15 Member States representing 65% or more of the EU population. In the absence of a qualified majority vote against the proposal, the Commission thus can decide what to do next in terms of imposing tariffs. 

Tariff timeline and EU response  

Following President Trump’s global “reciprocal” tariffs announcement on Wednesday 2 April, chief EU trade negotiator, Commissioner Šefčovič, briefed EU ambassadors on 4 April and later had an exchange with US Secretary of Commerce, Howard Lutnick, and US trade representative Ambassador Jamieson Greer. On Monday 7 April, European trade ministers met in Luxembourg to discuss EU trade relations with the US and forthcoming strategies.  On the same day, European Commission President, Ursula von der Leyen announced that the EU had offered the US “zero-for-zero tariffs for industrial goods”. This could also cover cars, as mentioned by Commissioner Šefčovič. However, President von der Leyen also stated that the EU was “prepared to respond through countermeasures and defend interests”.  

On Tuesday 8 April, the Commission proposed a robust list of US products that are due to be subject to EU tariffs, starting in May 2025. These tariffs will represent the first concrete action by the EU in the current trade dispute with the US and are in response to the earlier tariffs imposed by President Trump in February on steel and aluminium. The planned tariffs will range between 10% and 25% and will cover a list of 99 items, from US soybeans to chainsaws. These tariffs will impact about €21 billion worth of US trade with the EU. The proposal was put to the Member States’ representatives in the Council on Wednesday 9 April who voted, by reverse qualified majority as mentioned above, in favour of imposing the tariffs. Hungary is the only Member State which voted to block the proposal. The final list of products, which are part of this first set of countermeasures, are due to be officially adopted on 15 April.  

As the Commission’s proposal was not blocked by the Council, in theory, the first round of these EU tariffs on US products will come into effect on the 15 April, and on 15 May for the remaining ones. However, importantly the Commission has stated that “these countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome”.  

EU Member States positions are largely unified. This is clear from the vote on 9 April, which permitted the Commission to continue with its proposals with almost complete unanimity. It is also recognised in the various statements made by European trade ministers following Monday’s Foreign Council (7 April), where a clear majority believe something must be done in response to President Trump’s actions, although it is believed that escalation is not the first port of call.  

One area where Member States’ positions might begin to diverge in this trade dispute is regarding the use of the anti-coercion instrument (ACI), an EU trade defence instrument. This is seen by Irish representatives as being “nuclear response”, in contrast to others such as representatives from France who have said that everything should be “put on the table” and that no option will be “excluded”. Under the Regulation, the ACI permits import and export restrictions to be placed on goods and services, including digital services, but also on intellectual property rights and foreign direct investment. 

While Trump’s 90-day “pause” on “reciprocal” tariffs may have offered some reprieve, and has been welcomed by the EU, the situation remains very volatile. According to Commission trade spokesperson, Olof Gill, the EU will “plot a careful path forward”. Additionally, on 10 April, Commission President Ursula von der Leyen stated in a post on X, “If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues. As I have said before, all options remain on the table”.