The European Union (EU) announced on Sunday that it will extend the suspension of its trade countermeasures against the United States until 1 August 2025.
The decision comes as the bloc seeks to continue negotiations with the US as President Donald Trump threatened to impose a new 30 per cent tariff rate on EU goods, Bloomberg reported.
How is the EU preparing to tackle the new threat?
These countermeasures, initially adopted by the bloc in response to tariffs imposed by Trump on steel and aluminum, had been paused to allow for talks and are due to snap back automatically at midnight on Tuesday, said EU chief Ursula von der Leyen.
The chief also said that meanwhile, the EU would continue to prepare further countermeasures, ensuring the bloc is “fully prepared,” in case the negotiations falter.
Trump’s renewed tariff threat
The extension comes after Trump, in a letter published on Saturday, warned the EU of a 30 per cent tariff rate next month if better terms can’t be negotiated.
Trump has been sending out letters to trading partners, tweaking his proposed tariff levels from April and inviting them to further talks.
This latest move by the US president has punctured recent optimism in Brussels over the prospects for an 11th-hour agreement between the major economies.
Economic impact of EU countermeasures
The current list of countermeasures, which has been paused, targets around €21 billion ($24.5 billion) of US goods.
The EU also has a second list prepared which is valued around €72 billion, highlighting the potential economic impact if a trade resolution is not reached.
The bloc’s ambassadors are scheduled to meet on Sunday to discuss the trade situation.
Key sticking points between the US and EU
Cars and tariff levels on agriculture have emerged as key sticking points between the EU and the US as the two sides work toward a provisional trade agreement in the coming days.
The EU is pushing for a tariff no higher than 10 per cent on agricultural exports.
An offset mechanism that some carmakers had pushed as a way to grant tariff relief to companies in return for investments in the US isn’t under consideration for now as concerns arise for the EU that it could shift production across the Atlantic.
Instead, the bloc’s negotiators are now focusing talks on car tariffs, the news agency reported.
EU holds its anti-coercion instrument
Von der Leyen also clarified that the EU’s most powerful trade tool, the anti-coercion instrument (ACI) would not be deployed at this point. “The ACI is created for extraordinary situations,” she said. “We are not there yet.”
The extension of the suspension of countermeasures will require approval from the EU member states, the news report said.