• European Commission votes to suspend 2024 Trans-Atlantic Investment & Trade Agreement
• $150bn US exports face 25% retaliatory duties; bourbon, Harleys, soybeans in cross-hairs
• Move follows Trump threat of 25% tariff on all EU cars and steel

BRUSSELS, BELGIUM (TDR) — The European Commission voted Wednesday to immediately suspend implementation of the 2024 Trans-Atlantic Investment & Trade Agreement (TTIA) and to draft retaliatory tariffs on $150 billion of U.S. goods, after President Donald Trump vowed to slap 25% duties on all EU car imports and “any steel that crosses the Atlantic.”

European Trade Commissioner Maroš Šefčovič told reporters the freeze is “temporary but unconditional,” and will remain until Washington withdraws its threatened levies. EU ministers will formalize the decision at a special session Friday, clearing the way for counter-duties on iconic U.S. exports including Kentucky bourbon, Harley-Davidson motorcycles, Maine lobster and Iowa soybeans.

“We will not negotiate under the barrel of a tariff gun,” Šefčovič said. “If America wants trade peace, it knows where to find us.”

What Is Being Frozen?

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The TTIA, signed in January 2024, had begun phased tariff elimination and mutual recognition of industrial standards. Its suspension means:

• Zero-tariff lanes for EU autos, machinery and chemicals into the U.S. are put on ice;
• Mutual recognition of EU-US organic-food certificates stops immediately;
• Investment-protection chapters (ICS courts) will not be implemented;
• Digital-trade rules (data-localisation bans) are paused indefinitely.

Commission economists estimate the freeze costs EU exporters €18 billion ($19.5bn) in lost margin this year alone.

Trump’s Trigger

Speaking on the South Lawn Monday, Trump said:

“If the EU thinks it can flood us with cars and cheap steel, they’re wrong. We’ll put 25% on every Mercedes, BMW and slab of steel that lands here. America First means American metal and American wheels.”

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The White House followed up Tuesday with a Section 232 investigation into “EU automotive imports as a threat to national security,” mirroring the 2018 steel probe. A public-comment window closes July 15, after which the president can impose duties without congressional approval.

EU Counter-Package

The Commission circulated a 26-page retaliation list Wednesday covering 202 tariff lines. Key items:

Total affected trade: $150.9 billion — equivalent to the EU’s estimate of damage from Trump’s threatened tariffs.

Legal Basis — Regulation 654/2026

The EU will invoke Regulation 654/2026, the bloc’s post-Trump trade-defense framework, which allows “rebalancing measures” within 60 days of a foreign investigation that lacks WTO notification. Brussels argues the Section 232 auto probe is de facto protectionism because it cites national-security grounds not recognized by the WTO.

“We are acting fully within WTO rules—Article XXI security exceptions cannot be a blanket license for economic aggression,” said Commission VP Valdis Dombrovskis.

Industry Reactions

European automakers — which exported 1.1 million cars worth $42 billion to the U.S. last year — warned the suspension could cost 175,000 jobs. BMW said it will “re-evaluate” a planned $1.7 billion SUV plant in South Carolina, while Volkswagen froze talks to expand its Chattanooga facility.

On the U.S. side, the Distilled Spirits Council said EU whiskey duties would wipe out 20% of U.S. bourbon exports, threatening 7,500 Kentucky jobs. Harley-Davidson shares fell 6.4% on the news; the company gets 15% of global sales from the EU.

“We’re caught in the middle of a political food fight,” said Harley CEO Jochen Zeitz. “Our customers just want to ride.”

WTO Path Uncertain

Geneva-based trade officials told TDR the EU will file a formal WTO complaint only if the U.S. actually imposes the 25% duties. “For now, Brussels is using rebalancing to show pain without litigation,” one diplomat said.

However, any WTO panel would face the same legal knot that stymied the 2018 steel case: Article XXI security exceptions are self-judging, and the U.S. can block panel formation for 12 months.

Macro Impact

The stand-off could shave 0.3 percentage points off EU GDP growth in 2027, according to ECB modelling, while U.S. real incomes would fall 0.1% due to higher import prices. Global trade volume could drop 1.2% if duties remain for two years.

Currency markets reacted immediately: the euro fell 0.8% to $1.02, while the dollar index hit a six-month high on safe-haven flows.

Off-Ramp Scenarios

Diplomats on both sides say a face-saving exit could include:

• a “zero-for-zero” sectoral deal on industrial steel;
• a tariff-rate quota on EU autos (e.g., 1 million units at 10%, remainder at 25%);
• a joint EU-U.S. green-steel club that exempts low-carbon producers.

But with U.S. election season ramping up and EU farm lobbies mobilizing, compromise may have to wait until 2027.

Next Calendar

• July 15 — USTR Section 232 auto comment window closes;
• July 19 — EU agriculture ministers debate retaliation scope;
• Aug 1 — Commission formally adopts counter-tariffs;
• Aug 15 — Duties enter force (unless US withdraws threat);
• Sept 1 — WTO dispute consultations requested (if duties imposed).

Will Brussels’ hard-ball tactics force Washington to blink, or are both sides gearing up for a multi-year trade war that reshapes the trans-Atlantic alliance?

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