Trump is back and so are his tariffs (see our previous briefing on his return to office). As the EU has once again entered his crosshairs, the trading bloc is gearing up to defend its economy. For instance, President Trump has announced 25 % tariffs on steel and aluminium imports (set to kick in early March) as well as “reciprocal” tariffs, likely implying tariff hikes to match trading partners’ tariff rates for US goods. Meanwhile, domestic EU industries are already under considerable pressure, notably due to Chinese imports such as electric vehicles (EVs).
The EU has equipped itself with various trade defence instruments (TDIs) to protect its economy from unmanageable import surges, unfair foreign state support and to address impairment of its access to foreign markets. This briefing provides an overview of the EU’s broader trade defence arsenal and of the trading bloc’s options to navigate the increasingly rough seas of global trade.
Negotiations to defuse tensions
While additional US tariffs on EU goods are unlikely to be avoided entirely, the EU is contemplating concessions to get President Trump to show restraint. Canada and Mexico have similarly been able to, at least temporarily, avert universal 25% tariffs on their exports to the US by pledging greater efforts in strengthening border security but also by threatening with retaliatory tariffs.
While negotiations and potential action on tariffs will take into account the full extent of the EU-US trade relationship, the EU’s concessions may for instance, as during Trump’s first term, include agreements to increase imports of US natural gas. Moreover, EU officials are reported to consider lowering import tariffs on US cars to avoid US tariffs on other goods. Further EU concessions could include increasing defence spending and buying US military equipment, which would however further reinforce the EU’s dependency on the increasingly unreliable partnership with the US. EU officials have signalled that negotiations with the US remained the best course of action at the moment. Yet, negotiations and offering concessions can only be a viable strategy with a credible and significant threat of retaliation in the backdrop.
Trade Defence and retaliation
Retaliatory tariffs
The EU has several options at its disposal to display a credible retaliatory threat against US tariff hikes and other measures. In light of Trump’s first term, the European Commission (Commission) is likely already keeping retaliatory tariff lists at hand. When Trump imposed tariffs on European steel and aluminium in 2018 (US Section 232 tariffs), the EU retaliated with tariffs on several US goods, often produced in key Republican states such as bourbon whiskey, blue jeans and Harley-Davidson Motorcycles. Notably the tariffs on these motorcycles gave the European Court of Justice the occasion to clarify that EU tariffs may not be circumvented by relocating production outside of the US (see our briefing on the matter), considerably strengthening their effectiveness.
These duties were suspended following an agreement with the Biden administration and were set to kick back in automatically at the end of March 2025. The Commission could reinstate them at an earlier date to retaliate against the renewed US Section 232 tariffs by adopting another implementing regulation.
Countering coercion
Furthermore, US hostilities might bring the EU to make use of a TDI originally meant to address Chinese hostilities, namely its Anti-Coercion Instrument (ACI). It enables the EU to respond to a third country making threats or taking measures that affect trade or investment and meant to pressure the EU or its member states into particular policy decisions. Said economic coercion may affect any policy field and can take a variety of forms, including legislation but also any other formal or informal (in-)action. Following an examination determining the existence of economic coercion by a third country, the Commission will engage in consultations with the coercing third country. Should these efforts prove to be unsuccessful, the Commission may adopt in agreement with member states response measures to bring the third country to stop its coercion.
ACI response measures can include the imposition of new or increased customs duties, export and import restrictions, barring third country companies from accessing EU public procurement markets, restricting foreign direct investment into the Union as well as the restriction of financial flows among others. It enables the EU to take a wide range of measures in response to a third country pressuring the EU or its member states into making a particular choice through threats or measures affecting trade or investment. Said economic coercion may affect any policy field and can take a variety of forms, including legislation but also any other formal or informal (in-)action. Following an examination determining the existence of economic coercion by a third country, the Commission will engage in consultations with the coercing third country. Should these efforts prove to be unsuccessful, the Commission may adopt in agreement with member states response measures to bring the third country to stop its coercion. ACI response measures can include the imposition of new or increased customs duties, export and import restrictions, barring third country companies from accessing EU public procurement markets, restricting foreign direct investment into the Union as well as the restriction of financial flows among others.
The ACI thus gives the EU in principle considerable firepower and the ability to strike back against US economic hostilities by, for instance, targeting the US tech giants and their access to the single largest common market. Nonetheless, its scope may limit its ultimate effectiveness considerably. On the other hand, it remains unclear if Trump’s motivations to “rebalance” US trade relationships could be conceived as economic coercion under the ACI. The instrument likely does not cover the “unconditional” imposition of US tariffs without a coercive intention. On the other hand, potential US efforts to weaken EU tech regulation and enforcement frameworks (chiefly the DSA and DMA) mightjustify the ACI’s activation.
Safeguarding the EU economy
US tariff hikes may also cause global trade flows to divert from the US towards other markets such as the EU, threatening domestic industries with a surplus of imports. At the same time, the EU economy and several of its key industries are facing considerable pressure by international competitors.
The first round of US Section 232 tariffs on steel and aluminium in 2018 saw the EU introduce safeguards on steel products to protect the EU steel sector. These measures are intended to protect EU industries from an unforeseen, sharp and sudden increase of imports. Following a safeguard investigation procedure, the EU may impose temporary quantitative import restrictions concerning the investigated products, which may take the shape of import or tariff quotas. The tariff-rate quotas imposed by the EU on steel imports have been reviewed and re-extended multiple times until June 2026. In light of the looming renewed US Section 232 tariffs, the currently ongoing review of the steel safeguards is likely going to result in adjustments of the current measures.
Anti-dumping
Moreover, EU industries can also be harmed by regular import quantities if goods are sold in the EU below their normal value on their domestic market, in other words when goods are “dumped” onto the EU market. The Commission can investigate claims made by European producers exposed to the unfair competition of dumped imports or start an investigation on its own initiative. If the investigation concludes that imports are indeed made at dumped prices and cause injury to European industry, the Commission can impose anti-dumping duties onto dumped imports to reflect their real market value. Exporters may also commit to not sell their product in the EU below a minimum price. To take a recent example, the Commission has just imposed anti-dumping duties on Chinese biodiesel imports. Anti-dumping duties have also featured in EU-US trade relations, with the imposition of EU anti-dumping duties on US PVC earlier this year.
Tackling Foreign Subsidies
Similar distortions on the EU market can occur when subsidies granted by foreign states to foreign companies create unfair competition for EU companies. Subsidies are financial contributions made by a foreign government or public body, thereby providing the recipient with an economic advantage. This allows them to offer products on the EU market at lower prices. The Commission opens an investigation to determine the existence of harmful foreign subsidies causing material injury to EU industry, either upon an EU industry complaint or on its own initiative. If measures to remedy these subsidies would be in the European interest, the Commission may adopt countervailing measures to restore fair competition on the EU market.
Countervailing measures may take the shape of minimum import prices or adding a percentage to the price of the relevant imported goods. However, such countervailing measures have to be limited in scope to specific firms, industries or groups of such. Countervailing duties imposed on Chinese battery EVs to protect the EU automative sector have dominated headlines in recent months in fear of rising tensions with China. The imposed duties are now also being legally challenged by the targeted Chinese EV manufacturers. Regarding the US and in light of the significant tax cuts expected under the second Trump administration, it is worth noting that forgone government revenue such as tax exemptions can also be conceived as a subsidy under the EU’s Anti-Subsidy Regulation, which may make this TDI increasingly relevant in the future if the tax cuts benefit exporting US industries.
Addressing a similar issue as the Anti-Subsidy Regulation, the EU’s Foreign Subsidies Regulation (FSR) allows the Commission to counter foreign subsidies when these cause distortions in EU acquisition and public procurement markets. Concentrations and public procurement bids above a certain threshold and involving financial contributions by non-EU governments must be notified to the Commission, who can also begin investigations on its own initiative. If the Commission determines the existence of a distortive foreign subsidy, it can determine appropriate redressive measures or accept commitments from the relevant entity. Remedies range from select asset divestments, guarantees, or even the outright prohibition of the concentration or the award of the procurement contract. The still rather young instrument is reported to already have resulted in significant economic losses for Chinese companies by forcing them to withdraw biddings, prompting calls by Chinese stakeholders for the EU to adapt its framework.
Protecting international procurement
Lastly, the EU also has the means to address obstacles to EU companies’ access to foreign public procurement markets through its International Procurement Instrument (Regulation (EU) 2022/1031, IPI). If an IPI investigation and the parallel consultation with the foreign country find that its procurement practices unduly discriminate against EU companies, goods and services, the EU may issue IPI measures aiming to encourage the reciprocal opening of public procurement markets to EU economic operators. These measures can include score adjustments to tenders submitted by companies of the investigated foreign country and can even take the shape of exclusions from tenders.
China’s procurement market for medical devices has become the subject of the first IPI investigation in early 2024. In addition and beyond tariff hikes, Trump’s new America First Trade Policy also initiates a re-evaluation of US public procurement with the explicit aim to favor domestic companies (“Buy American”), which may result in restrictions imposed on the procurement market access for EU companies. The IPI may thus also gain relevance as an additional TDI at the EU’s disposal on the many fronts of the ongoing EU-US trade spat.
Impact on business
Considering the rising geopolitical tensions and economic challenges, the EU might find itself increasingly reliant on its TDIs, which presents both risks and opportunities. Tariffs and retaliatory measures are likely to result in higher costs and disrupted logistics for firms with global supply chains and might also drive overall market volatility. Yet, companies protected by anti-dumping measures or safeguards may gain a competitive edge, and those that proactively adapt — by strengthening compliance, diversifying markets, and building resilient supply chains — could turn this turbulent environment into a catalyst for growth and innovation. Ultimately, the EU’s ability to balance domestic economic protection with strategic diplomacy will be critical, and businesses must stay agile and informed to mitigate risks and seize emerging opportunities.
BLOMSTEIN’s team has many years of professional experience and profound expertise in foreign trade law, including compliance with supply chain regulation, ESG and customs law. We keep following the latest developments in EU trade policy and are happy to advise you on all aspects of EU foreign trade law. If you have any questions, please do not hesitate to contact Roland M. Stein, Leonard von Rummel, Laura Louca and Ines Florinde Horn.