On 8 May 2025, the European Union launched a public consultation on potential countermeasures in response to U.S. automotive tariffs and the potential imposition of a 20% “reciprocal” tariff on EU-origin goods—covering around €379 billion of EU exports to the U.S. In particular, the EU is considering imposing tariffs on U.S. imports worth approximately €95 billion, covering a wide range of industrial and agricultural products. The Commission is also evaluating possible restrictions on EU exports to the U.S., principally steel scrap and certain chemical products, valued at €4.4 billion. If implemented, the export restrictions could take the form of export duties, quantitative restrictions such as quotas or licensing requirements, additional administrative charges, or a combination of these measures. No specific tariff rates have been proposed at this stage and the consultation is open until 10 June. Notably, the EU has not thus far targeted U.S. services as part of its retaliatory measures.
These countermeasures could be activated if ongoing EU-U.S. negotiations fail to deliver a mutually acceptable resolution, and the U.S. tariffs remain in place. While the U.S. currently imposes a 10% global reciprocal tariff on most imports, the negotiations follow a decision by President Trump to pause higher, country-specific tariff rates that were scheduled to come into effect on April 9 and would have increased the reciprocal tariff rate on U.S. imports from the EU to 20%. Those higher tariffs are paused for 90-days, or until 9 July 2025, absent an extension. EU exports of autos and auto parts to the U.S. are also subject to 25% tariffs, while the U.S. is also considering imposing additional sector-specific tariffs on—among other sectors—imports of pharmaceuticals and related ingredients; semiconductors and semiconductor manufacturing equipment and their derivative products; critical minerals and their derivative products; as well as commercial aircraft, jet engines, and related parts. Should it proceed with any of these measures, the EU is likely to increase the scope of its proposed response.
If adopted, the EU countermeasures would supplement the existing EU “Rebalancing Tariffs” previously introduced—and suspended until 14 July—in response to increased U.S. steel and aluminum duties. Most of the products covered by the Rebalancing Tariffs would be subject to a 25% ad valorem duty, with some facing a reduced rate of 10%. The Rebalancing Tariffs would apply to U.S. goods exports worth up to €26 billion.
The Enforcement Regulation and the Anti-Coercion Instrument
In preparing for a scenario in which negotiations with the U.S. fail to bring tariff relief, the EU has several legal instruments at its disposal to take responsive countermeasures, most notably the Enforcement Regulation and the Anti-Coercion Instrument (ACI), with some overlapping and some distinguishing features.
A. Intended Use of the Two Instruments
The Enforcement Regulation is a long-standing mechanism designed to enforce the EU’s rights under international trade agreements, including under World Trade Organization (WTO) agreements. Initially adopted in 2014 and amended in 2021, it empowers the EU to respond to breaches of trade obligations—particularly when a trading partner withdraws concessions granted under WTO agreements or fails to implement a ruling adopted by the WTO Dispute Settlement Body. Crucially, the amended Regulation now allows the EU to act unilaterally when multilateral adjudication is not possible, including in the absence of a functioning WTO Appellate Body (which has lacked the necessary quorum since late 2019, following a U.S. refusal to appoint additional members to the body).
The ACI is a newer framework that is intended to act as a deterrent. It offers the EU the ability to respond to economic coercion even when those coercive measures do not violate WTO rules. Economic coercion is defined as situations where a third country seeks to pressure the EU or its Member States into making or abandoning specific policy decisions by applying, or threatening to apply, trade or investment measures.
B. Available EU Countermeasures
Enforcement Regulation countermeasures are extensive and encompass new tariffs or import quotas on goods, export restrictions, the suspension of protections for services and adoption of restrictions on trade in services, the exclusion of certain suppliers from public procurement opportunities, and the suspension of intellectual property rights protections.
The ACI gives the EU much the same powers, and in addition, permits measures to restrict foreign direct investment (FDI), banking and other financial services, restrictions on the placing on the EU market of chemicals, and discriminatory sanitary and phytosanitary measures.
In addition, both the Enforcement Regulation and the ACI establish rules of origin for services and investments. These rules treat services and investments as EU-origin where these are provided through a commercial presence that involves “substantive business operations” in an EU Member State such that the company in question “has a direct and effective link with the economy of that Member State”. For all other cross-border modes of supply, both instruments look to the ownership or control of the company in question to determine origin. However, where the EU adopts measures under the ACI, that instrument applies this less favorable ownership-or-control-based rule of origin also to supply of services by a commercial presence, setting aside the protections of EU origin.
C. Timelines
Both regulations are designed to allow the EU to act fast, and the ACI even specifies maximum timelines for each step required to be taken before countermeasures may be imposed. Where the Member States and Commission are aligned, the EU can act fast under either instrument.
The procedure for adopting such measures under the Enforcement Regulation is straightforward.
- The Commission will generally consult on products it intends to hit—as it did on 8 May.
- It will then propose the measure under the Enforcement Regulation and put it to a “qualified majority vote” in the Council (“QMV”, i.e., where approval requires a vote in favor by the representatives of at least 15 of the 27 EU Member States representing 65% of EU citizens).
By contrast, the ACI process is designed for escalation over a period of months—faster than WTO proceedings but with more steps than the Enforcement Regulation:
- The Commission assesses whether there has been “economic coercion” (this assessment can take a maximum of 4 months, but can also be almost immediate if there is clear coercion).
- The Council agrees by QMV (which must take place within 8-10 weeks of the Commission’s determination regarding economic coercion, but is likely to be sooner).
- The Commission must then consult with the third country in question for an “adequate” time—which again can be short.
- The Commission then presents its proposed measures to a committee of Member State experts (a “comitology committee”), which adopts the proposed countermeasures by QMV, generally no less than 14 days after the Commission tables its proposal.
- The measures must be applied within no more than 3 months from their adoption, unless there are “special circumstances” that require a longer delay—but this too is likely to take place much sooner.
Once adopted, the measure will generally enter into force 20 days after its publication in the EU’s Official Journal.
Under both instruments, certain restrictions (such as a new tax measures) may require further EU- or national-level legislation.
Alternative Legal Instruments
In addition to the Enforcement Regulation and the ACI, the EU has several other legal tools at its disposal to counteract or mitigate the effects of trade-related pressure from the U.S. or other third countries. These instruments could be used either in tandem with the Enforcement Regulation and the ACI or as stand-alone responses.
One such option is the introduction of safeguard measures, which are temporary import restrictions or tariffs imposed to protect domestic industries from sudden and harmful surges in imports (see rules for imports from WTO countries). The EU previously adopted safeguards in response to the first round of Trump-era steel tariffs, aiming to stabilize its internal market from increases in steel imports resulting from the knock-on effects of diverted global trade flows. Safeguards are limited to eight years under the WTO Agreement on Safeguards, and the EU is currently considering how to maintain protections for its steel and aluminum sectors after its current measures on steel run out on June 30, 2026.
Another potential route is for the Commission to launch new anti-subsidy oranti-dumping investigations against U.S. exports. If certain American goods are being sold into the EU market at artificially low prices or with the benefit of state subsidies that distort competition, these investigations could lead to the imposition of antidumping or countervailing duties.
The EU may also choose to lean on newer instruments that reflect its evolving approach to trade defense in a more politically charged global environment. One example is the Foreign Subsidies Regulation (FSR), which enables the EU to scrutinize and restrict foreign-subsidized companies from gaining undue advantage in the EU market, particularly in mergers and acquisitions, or public procurement. Similarly, the International Procurement Instrument (IPI) gives the EU leverage over trading partners that deny reciprocal access to EU firms in their public procurement markets. If U.S. suppliers enjoy broad access to EU tenders while EU firms face barriers in the U.S., the EU could restrict access for U.S. goods or providers (or restrict their ability to compete in public tenders on terms equal to those enjoyed by EU counterparts) under the IPI.
Finally, the EU might also consider leveraging its regulatory framework through tighter enforcement of product standards, cybersecurity rules, or ESG-related requirements. Measures such as carbon border adjustments, supply chain due diligence laws, or digital compliance rules could have a significant extraterritorial impact. Although not designed as retaliatory in nature—and much though the EU has stated that these regimes are out of scope of negotiations with the U.S.—these rules could be used to place additional pressure on non-EU exporters, including those from the U.S. This is particularly true in instances where the EU has discretion over enforcement, and where exporters’ practices do not meet EU expectations.
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Our cross-practice EU trade policy and trade controls team is advising clients on the impact of these EU-U.S. trade developments. We guide clients through this shifting landscape, helping them assess and mitigate the risks these measures pose to their operations and future projects.