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The transatlantic economic partnership has reached a structural breaking point. In February 2026, the European Parliament voted to suspend ratification of the Turnberry Agreement — the landmark EU-US trade deal signed in July 2025 — after the United States repeatedly breached its terms by imposing new 15% universal tariffs and 25% auto tariffs under Section 232 authority. With the EU now preparing to activate its never-before-used Anti-Coercion Instrument (ACI) as a retaliatory mechanism, multinational corporations face the reality of two permanently distinct regulatory and tariff regimes across the Atlantic.
The Collapse of the Turnberry Agreement
The Turnberry Agreement, also known as the Scotland Accord, was politically agreed on July 27, 2025, between European Commission President Ursula von der Leyen and US President Donald Trump. The deal promised a stable 15% tariff ceiling for most EU exports — including cars, semiconductors, and pharmaceuticals — in exchange for approximately $600 billion in European investments in US energy and infrastructure, plus $750 billion in EU purchases of American LNG and oil.
However, the agreement began unraveling within months. The US imposed a 15% universal import surcharge following a Supreme Court ruling that curtailed executive trade powers, which Brussels viewed as a direct breach of the deal's core promise of tariff stability. Further escalations included 25% auto tariffs under Section 232 and, in April 2026, strengthened tariffs on steel, aluminum, and copper — with flat 50% tariffs on articles made entirely of these metals.
The European Parliament's suspension vote on February 23, 2026, marked the formal collapse. EU officials warned that cumulative tariffs on European goods could reach 30%. A 'one-year health check' is scheduled for July 2026, but without a legal carve-out for European goods, ratification is unlikely to resume.
Corporate Fallout: Billions in Losses
The trade fracture has already inflicted severe damage on major corporations. Volkswagen reported €1.1 billion in losses directly attributable to US tariffs in the first half of 2025 alone, with CFO Arno Antlitz warning that full-year tariff costs could reach €5 billion. The German automaker posted its first annual loss since the pandemic — a net loss of €1.5 billion for 2024 — and has been forced to slash its revenue forecast.
Airbus shares fell 8% following the suspension announcement, while LVMH's spirits profits plunged 25% as luxury goods faced new tariff barriers. On the American side, Caterpillar faces a $2.6 billion tariff bill from retaliatory EU measures and supply chain disruptions.
The impact of US tariffs on European automakers has been particularly severe, with the 25% auto tariff effectively pricing many European vehicles out of the US market.
KPMG and Thomson Reuters Data: A Permanent Shift
Survey data confirms that businesses view these changes as structural rather than temporary. KPMG's 2026 Tariff Survey, fielded among 300 C-suite leaders at organizations with over $1 billion in revenue, found that 76% of trade professionals now view US tariffs as a permanent structural shift. The survey also revealed that 78% of organizations report higher costs of goods sold, 51% report margin declines, and 34% now pass through more than half of tariff costs to consumers — up from just 13% in May 2025.
Thomson Reuters' 2026 Global Trade Report, surveying 225 trade professionals worldwide, found that 65% of firms are permanently changing sourcing patterns. Supply chain concerns have doubled year-over-year as companies scramble to adapt to unprecedented regulatory complexity. The report notes that 'complexity' and 'disruption' now carry significantly more weight in describing global trade.
Reshoring is accelerating rapidly: 26% of firms are in formal planning or execution stages, up from just 10% six months earlier, though 60% say full reshoring would take one to three years. This reshoring trend in global supply chains is reshaping manufacturing footprints across industries.
The EU's Anti-Coercion Instrument: A Trade Bazooka
The most significant escalation is the EU's preparation to activate the Anti-Coercion Instrument (ACI) — a regulation adopted in November 2023 and entered into force on December 27, 2023, but never yet used. Dubbed the 'trade bazooka,' the ACI allows the European Commission to investigate economic coercion, seek negotiations, and if they fail, impose countermeasures including tariffs, trade restrictions, suspension of intellectual property protections, and limits on access to the EU's single market of 500 million consumers.
Activation is not automatic: the Commission has four months to assess a case, after which EU member states vote by qualified majority. France leads calls for activation, supported by Germany, while Italy, Poland, and Eastern partners urge caution over transatlantic security concerns. An emergency summit in Brussels discussed options including a €93 billion retaliatory tariff package.
The EU Anti-Coercion Instrument explained represents a fundamental shift in European trade defense, removing the veto power for trade-restrictive measures and enabling faster responses to economic pressure.
Implications for Global Supply Chains
The transatlantic fracture forces multinational corporations to operationalize two distinct regulatory and tariff regimes. Supply chains that were optimized for a single integrated Atlantic economy must now bifurcate — with separate sourcing, manufacturing, and distribution networks for the EU and US markets.
KPMG's 2026 Global Trade Outlook notes that US imports surged over 50% in Q1 2025 as firms rushed goods in ahead of tariffs, then contracted sharply. Nearly 85% of 2025 job gains occurred before April 2 tariffs took effect. The inflationary impact was initially modest (0.5 percentage points to core PCE) but is expected to grow in early 2026 as stockpiled inventories are liquidated.
The global supply chain restructuring 2026 is creating new trade corridors, with the EU accelerating deals with Mercosur and Indo-Pacific partners while the US pursues bilateral agreements with other allies.
Expert Perspectives
'There will be no compromise on ratifying the deal until the Greenland threats are resolved,' stated Bernd Lange, head of the European Parliament's trade committee, referring to US demands that the EU allow the US to take over Greenland as a condition for tariff relief.
'The EU's response will be unflinching, united and proportionate,' warned European Commission President Ursula von der Leyen, signaling that the ACI activation is a credible threat.
KPMG's survey authors note that while near-term sentiment improved slightly following the Supreme Court ruling invalidating IEEPA as a tariff basis, caution remains pervasive. The report concludes that trade uncertainty is weighing heavily on investment, with 82% of firms reporting declining foreign sales and 68% delaying capital expenditure decisions.
FAQ
What is the Turnberry Agreement?
The Turnberry Agreement (also called the Scotland Accord) was a landmark EU-US trade deal signed in July 2025 that set a 15% tariff ceiling for most EU exports in exchange for European investments in US energy and infrastructure. It collapsed in February 2026 after the US imposed new tariffs.
What is the EU's Anti-Coercion Instrument?
The ACI is a 2023 EU regulation that allows the bloc to retaliate against economic coercion by third countries through measures such as tariffs, trade restrictions, and limits on market access. It has never been activated but is now being prepared for use against the US.
How are companies responding to the trade collapse?
According to KPMG and Thomson Reuters surveys, 65% of firms are permanently changing sourcing patterns, 26% are planning or executing reshoring, and 34% are passing more than half of tariff costs to consumers. Many are bifurcating supply chains between EU and US markets.
What tariffs are currently in place?
The US has imposed a 15% universal import surcharge, 25% auto tariffs under Section 232, and strengthened steel/aluminum/copper tariffs of 50% on articles made entirely of those metals. The EU is preparing retaliatory tariffs and ACI measures.
When might the ACI be activated?
The European Commission has a four-month assessment period. If EU member states approve by qualified majority, countermeasures could be deployed in mid-to-late 2026, potentially escalating the transatlantic trade war further.
Conclusion
The collapse of the Turnberry Agreement and the looming activation of the ACI mark a structural breaking point in the transatlantic relationship. For multinational corporations, the era of a single integrated Atlantic economy is over. Companies must now navigate two distinct regulatory and tariff regimes, with permanent changes to sourcing, manufacturing, and pricing strategies. The future of EU-US trade relations will depend on the July 2026 health check and whether diplomatic channels can prevent a full-blown trade war.
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