US President Donald Trump said he held a “great call” on Thursday with European Commission President Ursula von der Leyen and granted the European Union until 4 July to implement what he described as a trade agreement between Washington and Brussels.
Trump warned that if the EU fails to comply by that date, the United States will immediately raise tariffs to “much higher levels”.
Writing on his social media platform Truth Social, Trump claimed he had waited “patiently” for the European Union to fulfil what he described as commitments made under a “historic trade agreement” reached in Turnberry, Scotland.
According to Trump, the agreement included a European pledge to reduce tariffs on American goods to zero.
The US president said he agreed to extend the deadline until America’s 250th Independence Day celebrations on 4 July, but warned that tariffs would rise sharply if Brussels failed to implement the deal.
Trump Threatens Higher Tariffs on European Vehicles
Trump’s latest warning follows earlier threats made last Friday to raise tariffs on European cars and trucks from the current 15 percent to 25 percent this week.
He accused the European Union of failing to comply with conditions outlined in the trade agreement reached in Scotland last July.
The dispute comes at a particularly sensitive stage for the broader US EU trade arrangement.
Although the European Parliament approved the agreement in March following amendments, the deal still requires further negotiations and ratification from member states before full implementation can proceed.
Under the framework of the agreement, the EU committed to removing tariffs on American industrial goods in exchange for a 15 percent cap on most European exports entering the US market.
However, Brussels argues that Washington itself has not fully respected parts of the agreement, especially after the United States expanded 50 percent tariffs on European steel and aluminium last August to cover hundreds of additional products.
Brussels Says US Commitments Still Unresolved
Von der Leyen previously stated that the European Union was in the final stages of implementing its remaining tariff obligations.
At the same time, she noted that several American commitments still require alignment with the agreed tariff ceiling.
Trump’s latest threats have reportedly pushed several European capitals to reconsider the timing of final approval for the agreement, despite growing pressure within the bloc to demonstrate reliability in fulfilling trade obligations.
According to previous European discussions, negotiations focused heavily on two key provisions:
- Allowing the European Union to reduce tariffs on American exports only after Washington lowers its own tariffs to the agreed 15 percent ceiling.
- Granting Brussels the ability to terminate the agreement if Trump imposes new tariffs before 31 March 2028 without requiring another vote.
Germany Faces Biggest Economic Risk
Europe now faces a difficult balancing act between preserving the trade agreement with Washington and avoiding a new tariff war while also responding to mounting domestic pressure demanding retaliation against Trump’s threats.
Germany is viewed as the European country most exposed to the consequences of any tariff escalation.
The proposed increase to 25 percent would heavily impact Germany’s automotive sector, particularly major manufacturers such as Volkswagen, at a time when the German economy is already struggling with prolonged slowdown.
Germany’s Ifo economic institute warned that a new trade war could push the country into recession this year, especially given the central role the automotive industry plays within the German economy.
German Finance Minister Lars Klingbeil previously stated that Europe does not seek escalation and remains committed to pursuing a joint path with the United States.
French Finance Minister Roland Lescure also said both sides are still negotiating in good faith.
However, France has adopted a tougher tone in recent days.
French Trade Minister Nicolas Forissier warned that the European Union possesses tools capable of responding if Trump directs excessive pressure against strategic industries, insisting that Europe “will not be naive anymore”.
Europe Preparing Retaliatory Measures
The European Union has several potential response mechanisms available if Trump converts his threats into official policy.
Possible countermeasures include:
- Suspending the trade agreement entirely
- Activating the EU Anti Coercion Instrument, often referred to as the “bazooka”
- Imposing retaliatory tariffs on American goods
- Targeting major US technology companies with taxes or regulatory penalties
The Anti Coercion Instrument would allow the EU to restrict the flow of certain American products into European markets, exclude US companies from public tenders, or impose tariffs on American digital services.
However, implementation would require an investigation process lasting up to three months, limiting its immediate effectiveness.
Brussels also reportedly maintains a prepared list of retaliatory tariffs covering €93 billion worth of American goods.
The package includes around 2,000 products across 99 pages, ranging from washing machines, refrigerators, snowploughs, boats, and agricultural products to industrial goods, textiles, leather products, plastics, and household appliances.
Tech Giants Could Become Targets
European officials are also discussing the possibility of imposing taxes or regulatory measures targeting major American technology companies such as:
However, this option faces internal political resistance within the EU, particularly from countries such as Ireland, which remains cautious about adopting a bloc wide digital tax.
European estimates suggest that taxes on US technology company revenues in Europe could generate approximately €37.5 billion annually for the EU.
Even so, officials acknowledge that implementation would not be immediate and that major corporations could ultimately pass part of the financial burden onto consumers.
