An escalatory spiral that leads towards Eurasia's 10% 'trade war' scenario, however, would prompt Brussels to deploy escalatory measures, such as "export controls/duties, public procurement curbs, and/or penalties on U.S. services exports" by using the ACI "trade bazooka as a last resort," they concluded.

However, the European Commission, which leads trade policy for the EU, has already prepared a plan to hit back with more than $100bn in tariffs if talks collapse. It comes as EU exporters have already been facing a 10 percent tariff on goods sent to the US since April, on top of pre-existing levies.