EU prepares retaliation against Trump’s tariffs

European Commission President Ursula von der Leyen warned that the world would be “largely harmed” by the US’s new tariffs, stating that the EU is ready to retaliate but will first try to negotiate a deal.

Trump announced a 20% tariff on the EU as part of “reciprocal” tariffs on America’s largest trading partners.

The US President has long accused the EU of “unfair trade practices.”

Leyen stated on Thursday, April 3, that the bloc is “ready to respond” to US tariffs but emphasized that she prefers to negotiate to “remove remaining obstacles to transatlantic trade.”

Speaking during a visit to Uzbekistan, Leyen said, “We have completed the first package of counter-measures in response to the tariffs on steel. We are now preparing for more counter-measures to protect our interests and businesses should negotiations fail.”

Brussels will impose taxes on up to €26 billion worth of US goods on April 12 in response to steel and aluminum tariffs. Retaliation has not yet occurred against the 25% tariff on automobile exports announced last week.

Extending an olive branch to Trump, Leyen acknowledged that some countries “unfairly benefit” from global trade rules. However, she warned that “resorting to tariffs as your first and last resort will not solve the problem,” adding that tariffs would “harm consumers around the world” and increase the costs of groceries, medicine, and transportation.

Leyen pledged that the EU would “defend” targeted sectors, including automobiles and steel, and protect its market from dumped goods forcibly removed from the US market.

The Commission President added, “We will also closely monitor what the indirect effects of these tariffs might be because we cannot absorb global overcapacities, nor can we accept that our markets are being dumped into. Europe has everything it needs to weather this storm. We are in this together. If you deal with one of us, you deal with all of us.”

Behind the scenes, however, leaders are lobbying to ensure their industries are protected from EU countermeasures. France is trying to block proposed EU measures against bourbon whiskey, while Ireland has requested dairy taxes be lowered.

Italian Prime Minister Giorgia Meloni, one of Trump’s allies in Europe, previously stated that tariffs are “not appropriate for either side” and that she would seek an agreement with the US to “avoid a trade war.”

Trump accused the EU of targeting the US with a 39% tariff rate, a figure the commission states is 1%. The US President based this figure on other factors, such as VAT reaching 27% in some member states and restrictions on the import of chlorine-washed chicken and other agricultural products.

The White House is also targeting the bloc’s regulations and digital taxes on technology companies. In 2023, the EU exported €503 billion worth of goods to the US, yielding a surplus of €157 billion, but it had a deficit of €109 billion in services.

The EU may target US services by suspending certain intellectual property rights and excluding companies from public procurement contracts under the enforcement regulation. A step beyond this would be the first-time use of the “anti-coercion” instrument, but any measure will require the approval of a majority of member states.