EU trade ministers decided to impose retaliatory duties on certain US imports starting next week.
However, they favor negotiations with US President Donald Trump to eliminate existing tariffs instead of further retaliation.
The 27-nation bloc will face a 20% tariff on nearly all goods and a 25% tariff on steel, aluminum, and cars starting on Wednesday.
This is due to Trump’s policy of imposing tariffs on countries that he believes have high barriers to US imports.
Trade ministers convened in Luxembourg on Monday to discuss the EU’s response to the US Inflation Reduction Act and relations with China, according to a Reuters report.
Negotiations preferred path
Many ministers emphasised that launching negotiations and preventing an all-out trade war should be the priority.
“We need to remain calm and respond in a way that de-escalates. The stock markets right now show what will happen if we escalate straight away. But we will be prepared to take countermeasures if needed to get the Americans at the table,” Dutch Trade Minister Reinette Klever told reporters.
The EU is prepared to negotiate a “zero-for-zero” tariff agreement for industrial goods, as announced by European Commission President Ursula von der Leyen during a press conference in Brussels.
EU Trade Commissioner Maros Sefcovic was quoted in the Reuters report:
Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise.
The EU will impose two sets of targeted retaliatory duties on US imports in response to US tariffs on European steel and aluminium. The first set of duties will begin on April 15 and the second on May 15.
EU resilient
Sefcovic also stated that the EU was prepared to escalate its response, which could include using the EU’s Anti-Coercion Instrument (ACI) to target US services or restrict American companies from accessing public procurement tenders in the EU.
Although it would prefer to negotiate the removal of tariffs with the US.
He mirrored the sentiments of French Trade Minister Laurent Saint-Martin, stating:
We are ready to utilize all available measures to safeguard the single market.
However, some EU countries, especially those with strong trade ties to the United States, advised proceeding with caution.
The ACI was described as a “nuclear option” by Irish Foreign Minister Simon Harris, who stated his belief that most EU countries were not prepared to consider it, at least for the time being.
Robert Habeck, the outgoing German Economy Minister, advised that a united EU would find itself in a position of strength.
Speaking in Luxembourg, Habeck said that America’s position of weakness is evident in the collapsing stock markets and the potential for further damage.
He added that Elon Musk’s, a Trump supporter, desire for zero tariffs between Europe and the US reflects this weakness.
EU countermeasures
The EU is expected to approve initial countermeasures this week on up to $28 billion of US imports, including products ranging from dental floss to diamonds, in response to Trump’s steel and aluminium tariffs.
These countermeasures are specifically targeted rather than the broader reciprocal levies.
Trump has threatened to impose a 200% tariff on alcoholic beverages from the EU if the bloc proceeds with its proposed 50% tariff on US bourbon.
This threat has caused concern in France and Italy, major exporters of wine and spirits to the US.
The US has imposed tariffs on cars and other goods, and in response, the 27-nation bloc will release a larger package of countermeasures by the end of April.
In 2024, the US imported 334 billion euros ($366.2 billion) worth of goods from the EU, while the EU exported 532 billion euros worth of goods to the US.
This trade imbalance gives the EU less leverage than the US in a tariff war, as Brussels has fewer US goods to target.
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