The European Union said it would use a wide range of options to retaliate against the United States if US President Donald Trump implements his threat of imposing so-called reciprocal tariffs on goods imported from the EU this week.
European Commission President Ursula von der Leyen said on Tuesday, April 1, that Brussels does not necessarily want to retaliate. She also noted that the European Union has a strong response plan if necessary. Ursula von der Leyen stated that Brussels is ready to use the mentioned plan.
The United States intends to impose sweeping tariffs on global partners on Wednesday, April 2. Donald Trump claims that implementing appropriate trade policy measures will allow Washington to rectify levies and non-tariff barriers, which, according to him, are unfair. In the relevant context, he specifically mentions domestic regulations and how countries collect taxes, including the European Union’s value-added tax. Brussels insists that its value-added tax is a fair, non-discriminatory tax that applies equally to domestic and imported goods.
France and other European Union countries have called on trade officials to consider deploying the anti-coercion instrument of this block. In this case, it implies a mechanism that is designed to counteract countries that use trade and economic measures coercively. The media reported that if Brussels implements such practices, certain restrictions will be imposed on trade, services, intellectual property rights, foreign direct investment, and access to public procurement.
Ursula von der Leyen stated that the European Union’s priority goal is a negotiated solution once the new tariffs are announced. In this case, it implies the preferred way to resolve the current situation in the context of trade cooperation between Washington and Brussels. The mentioned measures are expected to take effect in parallel with an additional 25% levies on all autos shipped to the United States from other countries, and 25% duties on steel and aluminum imports from global partners.
Brussels is currently preparing countermeasures against Washington, which are expected to affect up to 26 billion euros ($28.09 billion) worth of US goods. These actions by the European Union are a reaction to the tightening phase of the United States trade policy, which includes tariffs on metals.
Ursula von der Leyen noted that Europe’s strength lies not only in trade but also in technology. In the relevant context, she highlighted the importance of European business for large technology companies from the United States, against which the European Union may impose retaliatory measures.
As part of the countermeasures, the European Commission could use legal instruments to restrict access to government contracts or digital advertising sales in a market worth about 100 billion euros.
Ursula von der Leyen said that Europe holds a lot of cards. In this context, she once again mentioned trade, technology, and the large-scale market of the region. Ursula von der Leyen also noted that Europe’s strength is based on its willingness to take firm countermeasures. According to her, all the tools are on the table.
It is worth mentioning that the media reported that the European Commission, the executive arm of the bloc that handles trade matters, is working on a term sheet of a potential agreement with the United States after the new tariffs take effect. According to journalists, the mentioned agreement will set out areas for negotiations on tariffs, mutual investments with the US, and easing some regulations and standards.
The media also reported, citing an insider aware of the details of the mentioned negotiation process, that it would take time to form a common position with the 27 member states on areas for discussion with the United States and potential concessions.
The ministers of trade of the European Union countries will meet on April 7 in Luxembourg. During this meeting, they will discuss how to respond to Donald Trump’s tariff package and to prepare for difficult talks.
In addition to reciprocal tariffs and levies on cars and some parts, Mr. Trump also announced other sectoral duties on goods, including lumber, pharmaceuticals, and semiconductors. It is worth noting that it is not yet known when these measures will take effect.
The Donald Trump administration drew attention to European Union regulations that it identifies as an obstacle to US exporters, such as digital taxes, environmental requirements, or value-added tax, when senior EU officials met with their counterparts in Washington in recent weeks as part of efforts to avoid an all-out confrontation.
The European Union has proposed to the United States the deal to lower tariffs on industrial goods, including automobiles, along with the possibility of increasing imports of US goods such as soybeans and liquefied natural gas. At the same time, the EU’s trade chief, Maros Sefcovic, who visited Washington last week, has so far failed to convince the United States to start appropriate negotiations.
Donald Trump, explaining the configuration of his trade policy, argues that the so-called tariff wall will encourage foreign companies or US firms operating abroad to build facilities in the United States and hire American workers, reversing the decline of the middle class in the country. In addition, the tax barrage is also designed to generate revenue to help pay for tax cuts.
Officials and companies from the European Union are concerned about the potential consequences of the mentioned measures by the United States for the situation in the global trade space. It is worth noting that Washington’s actions will also have implications for its relationships with Brussels on a broader scale, not limited only to the economic aspect of the relevant process. At the same time, the tension between the two shores of the Atlantic Ocean is guaranteed to provoke negative consequences for the entire geopolitical situation, which has recently been characterized by a high level of tension and does not show signs of an early at least minimal improvement in the current state of affairs.
Ursula von der Leyen stated that the trade relationships between the United States and the European Union are the largest and most prosperous worldwide. In this context, she noted that it would all be better to find a constructive solution.
Media outlets have highlighted that, against the backdrop of tougher trade policy measures by the United States, the European Union is seeking to make progress as part of efforts to diversify its economic ties. Adding to the agreements in place with 76 countries, Brussels has completed negotiations with the Mercosur bloc, Mexico, and Switzerland. The European Union also intends to finalize a deal with India by the end of the current year. The diversification of economic cooperation is one of the tools to offset or avoid the negative consequences of deteriorating collaboration with existing partners.
