Over the weekend, it was revealed that the United States will impose 30% tariffs on all goods from the European Union starting August 1. In response, the EU is preparing to strengthen its engagement with other countries affected by Donald Trump's tariffs, following a series of new threats directed at the bloc and other U.S. trading partners.
This move by Washington poses a serious challenge to the European economy and casts doubt on the future of transatlantic trade relations. The introduction of 30% tariffs will not only significantly raise the cost of European goods in the U.S. market but also create uncertainty for businesses, making long-term planning and investment more difficult.
The EU's response to U.S. actions is predictable. Strengthening cooperation with other countries affected by Trump's protectionist policies could lead to the formation of new trade alliances aimed at countering U.S. pressure. This, in turn, could reshape the geopolitical landscape and redirect global trade flows. Contacts with countries such as Canada and Japan may include potential coordination of actions.
On Monday, EU Competition Commissioner Teresa Ribera stated that the bloc is seeking to deepen trade agreements with India and other Asia-Pacific countries. "We need to explore how far and how deep we can go in our relations with other countries in the Pacific region," Ribera said from Beijing, where she had arrived for climate-related talks with Chinese officials. She emphasized that trade negotiations between the EU and India are ongoing and are expected to conclude by the end of the year.
The day before, European Commission President Ursula von der Leyen announced that the EU would extend the suspension of its trade countermeasures against the U.S. until August 1 to allow room for further negotiations. These measures were initially introduced in response to earlier tariffs imposed by Trump on steel and aluminum. They were first suspended and were scheduled to take effect at midnight on Tuesday. "At the same time, we will continue preparing further countermeasures to be fully ready," von der Leyen told reporters in Brussels on Sunday, reiterating the EU's preference for a negotiated solution.
The current list of countermeasures targets around €21 billion worth of U.S. goods, while the EU also has an additional list prepared worth about €72 billion, along with several export control measures to be presented to member states today.
Von der Leyen also stated that the EU's coercive instrument—its most powerful trade tool—will not be used at this stage. "The international cooperation mechanism was created for emergency situations," she said. "We're not there yet."
In a social media post responding to Trump's announcement, French President Emmanuel Macron called for accelerating the preparation of effective countermeasures, including a trade defense instrument, should an agreement not be reached by August 1. On Sunday evening, German Chancellor Friedrich Merz warned that the 30% tariffs would severely harm exporters from Europe's largest economy if a negotiated resolution to the trade conflict is not found.
Economists at Goldman Sachs Group Inc. noted that the proposed 30% tariff rate—combined with existing sectoral duties and the expected levy on critical goods—would raise the U.S.'s effective tariff rate on EU goods by 26 percentage points. If implemented and maintained, this could reduce the eurozone's GDP by a total of 1.2% by the end of 2026.
While the EU had tried to reach a preliminary agreement with the U.S. to avoid the tariff hike, Trump's letter undermined Brussels' recent optimism about a last-minute deal. Other countries, such as Mexico—also in talks with the U.S.—were surprised to receive similar letters.
As for the current EUR/USD technical setup, buyers need to regain control over the 1.1710 level. Only then can they aim for a test of 1.1740. From there, a push toward 1.1790 becomes possible, though achieving this without support from large players will be challenging. The most distant target is the 1.1825 high. If the instrument declines, significant buyer interest is expected only around 1.1660. If no support emerges there, it may be advisable to wait for a retest of the 1.1625 low or consider long positions from 1.1595.
Regarding GBP/USD, pound buyers need to break through the nearest resistance at 1.3490. This would open the path to 1.3530, though moving higher will be difficult. The furthest target lies in the 1.3570 level. If the pair falls, bears will try to reclaim control at 1.3450. A successful break of this range would deal a serious blow to the bulls and push GBP/USD down toward the 1.3411 low, with potential for further decline to 1.3376.
