I think there are at least two obvious reasons, 

* The EU profits from trade with Russia. Russia buys a lot of stuff, sells a lot of stuff the EU needs, and also uses the European market for its transactions with other parties, increasing its size and importance. A lot of European companies operate extensive local branches in Russia, such as banks, retailers, consumer goods makers, etc - whose bottom line will not be happy.

* EU countries can't afford to fire all of their weapons and come empty-handed. Let's assume the EU introduces a full ban on trade with Russia. Let's assume Russia takes over Belarus and Ukraine the next morning and imposes a blockade on the Baltic states. The EU then can't do anything short of a military intervention since it has exhausted its "soft" options.

There are subtle reasons, such as, some EU countries may not be happy about US and/or EU policies, so they would give the necessary lip service and then block the harsh measures because they feel that Russia balances out these parties.

**Update:** Losing half of Russia's international trade is not a deterrent to stop Putin from trying to rebuild the Russian sphere of influence. The **threats** of loss of half of the international trade are the deterrent. Once you actually trigger it, the damage is done but it's not a deterrent *anymore* since there's no downside for Putin to invade whoever he pleases after already suffering the "pre-consequences".