The European Union has warned that its trade with the United States could be effectively wiped out if Washington makes good on its threat to slap a 30% tariff on goods imported from the bloc.

Europe’s economic optimism is facing a critical test as US President Donald Trump’s unexpected threat to impose a 30% blanket tariff on EU exports from 1 August reignites fears of a transatlantic trade war.

The EU threatens $84 billion in retaliatory tariffs on U.S. exports as the August 1 trade deal deadline with the Trump administration approaches, escalating transatlantic trade tensions.