The European Union is pulling out the big guns.
In what can only be described as a dramatic escalation in the simmering transatlantic trade tensions, EU officials are readying a list of potential tariffs on roughly €100 billion ($113 billion) worth of American exports. It's not an immediate strike—more like loading the cannon in full view of your opponent—but the message couldn't be clearer: we're prepared to go nuclear if diplomacy fails.
I've covered trade disputes since the early Trump years, and this one has all the hallmarks of a high-stakes game of chicken. Both sides know a crash would be catastrophic, yet neither wants to be the first to swerve.
The context matters here. The Biden administration has maintained Trump's 25% duties on European steel and 10-20% tariffs on aluminum. They've slapped 25% duties on cars and certain auto parts. And as if that weren't enough, they've launched investigations that could soon target European lumber, pharmaceuticals, semiconductors, and more.
In response, Brussels has already targeted €21 billion of American goods—but tellingly, they've suspended implementation for 90 days while negotiations continue. This latest €100 billion threat? That's the diplomatic equivalent of saying, "You ain't seen nothing yet."
It's fascinating to watch the choreography of these disputes. The EU has to coordinate among 27 member states (no small feat), while the U.S. president can impose tariffs with basically the stroke of a pen. This structural asymmetry shapes everything about how the game unfolds.
"The EU is essentially saying, 'We may move slower, but when we hit back, we hit harder,'" a European diplomat told me last week, speaking on condition of anonymity because they weren't authorized to discuss strategy publicly.
Look, there's something almost tragically predictable about these cycles. Game theorists call it a "dynamic commitment problem"—both sides would be better off cooperating, but domestic politics demands they look tough. So instead of cooperation, we get... this.
The numbers themselves tell a story. The EU claims Trump-era and new tariff investigations threaten €549 billion of European exports. Their response targets about €121 billion of American goods (combining both waves of retaliation). That restraint—targeting less than a quarter of the threatened total—is deliberate and calculated.
What's particularly ironic? These tariff threats are supposed to lead to freer trade! The EU is reportedly working on proposals to reduce barriers and boost investment in the U.S. market. It's like threatening to slash your neighbor's tires unless they agree to carpool.
For businesses caught in the crossfire (and I've interviewed dozens in similar past disputes), the uncertainty is almost worse than the tariffs themselves. How do you plan a supply chain when the rules might completely change three months from now?
An Ohio manufacturer I spoke with yesterday put it bluntly: "We're basically guessing which products to stockpile and which suppliers to drop. It's like trying to play chess when someone keeps changing the board."
The smart money says we'll see negotiations drag right up to the deadline, followed by a partial deal that lets both sides claim victory while leaving some tariffs permanently in place. Markets will bounce around on every leaked statement and anonymous source in the meantime.
And consumers? Well, they'll pay for it all in the end. They always do.
In this increasingly fragmented global economy—where trade has become as much about geopolitics as economics—these showdowns are becoming the new normal. The only question is whether this particular game of chicken ends with a last-minute swerve or a very expensive crash.
