Not everything is about the US, you know, EU-internal politics regarding Israel are quite complicated.
I don't think we managed to officially ban products out of settlements yet but I don't see them anywhere for the simple reason that they have to be labelled as settlement products, not "Made in Israel". Israel threw a pretty fit over that, usually EU action (besides stern letters) takes the form of annoying the Israeli right by helping Palestinians.
Going against the USA means loss of a lot of things.
...none of which the EU can't replace. We've been in plenty a trade war, you're welcome to look up how those ended.