The European Union has dangled a few carrots in the direction of US president Donald Trump, but he has shown no interest in biting.
So on the same day the UK will agree a trade deal with the US, the European Commission found itself turning to the stick, in the absence of any progress being made around the negotiating table.
The EU’s executive arm, which steers trade policy, announced a second, larger package of retaliatory tariffs it proposed to raise on US exports sold across the Atlantic.
In response to the whirlwind of tariffs Mr Trump has slapped on trade coming from both allies and economic rivals, UK prime minister Keir Starmer took a characteristically cautious approach. The Labour leader did not respond with his own volley of levies on US goods.
It remains to be seen exactly how well that will have served him. The proof will be in how far his deal goes to lift tariffs Mr Trump has put on UK trade.
The EU, however, felt it needed to hit back as a show of strength while at the same time pushing to negotiate. The commission cobbled together an initial package of retaliatory duties on €21 billion worth of US products, such as oranges, steel and motorbikes.
They were put on ice before they ever kicked in, when market turmoil forced Mr Trump to announce a 90-day pause on his more excessive “liberation day” tariff measures in early April.
Negotiators from the commission have been talking to the US administration in the month since. They want to cut a deal where both the US tariffs and EU counter-tariffs would be scrapped.
The EU has offered to buy more liquefied natural gas (LNG) and soybeans from the US and to cut long standing import charges on American cars to zero.
Those offers have gained little traction. There is a growing sense of frustration in Brussels that the EU cannot pin down what Mr Trump really wants.
The commission on Thursday announced a second batch of retaliatory tariffs, that it would introduce if negotiations remained stalled. The measures target US aircraft manufacturers, such as Boeing, the automobile industry, whiskey bourbon, and agricultural exports from seafood to sweetcorn.
Should that fail to shift things, the conversation may turn to potential broadsides on not just goods, but services. This could mean striking at US tech multinationals through a levy on their advertising revenues, something the Government is desperate to avoid. The EU targeting US tech giants would indicate the tariff dispute has spiralled into an all-out trade war. Things are not at that point yet.
Still, there is a creeping fear Mr Trump’s tariffs may be here for the long term. That includes his blanket 10 per cent levy, his higher 25 per cent rates on imports of cars and steel, and perhaps future taxes on pharmaceuticals.
One senior commission official said the proposed retaliation this week was about more than putting short term pressure on the US “to help us at the negotiating table”.
Officials had one eye on trying to level the trade playing field, by matching US tariffs with responding EU ones in certain sectors, should negotiations fail. “If tariffs stay in place, and that might be a longer time perspective, we will have to rebalance and respond to the unilateral change of the terms of trade by the United States,” he said.
There is still a lot of road to run between now and mid-July, when the EU’s first round of retaliatory tariffs are due to kick in. “What happens in July depends on where we are in July,” another commission official said.
