EU Prepares to Retaliate If US Imposes Baseline Tariffs on Bloc

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(Bloomberg) — The European Union plans to impose retaliatory tariffs on US imports, including on Boeing Co. aircraft, if President Donald Trump puts a baseline levy on the bloc’s goods as many expect.

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EU officials expect the US to keep some duties in place, even after trade negotiations are concluded. Until now, the European Commission, which handles trade matters for the EU, hasn’t indicated if that would trigger retaliation from the bloc.  

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“We will need to retaliate and rebalance in some key sectors if the US insists on an asymmetrical deal,” the EU’s industry chief, Stephane Sejourne, told Bloomberg News, including if the “outcome of the negotiations is that a 10% tariff remains.” 

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The EU is rushing to clinch a deal with Washington before tariffs on nearly all its exports to the US jump to 50% on July 9. Trump has blasted the EU — which he has said was created to “screw” the US – over its goods surplus and perceived barriers to American trade. The EU estimates that US duties now cover €380 billion ($439 billion), or about 70%, of its exports to the US. 

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Negotiations have gained speed and the commission is doing everything to reach a solution that benefits both sides, according to an EU official, who spoke on the condition of anonymity. The commission told member states last week that the US was insisting on demands that would lead to an unfair deal, Bloomberg reported earlier. 

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The commission, which has been seeking a mutually beneficial deal, will assess any end-result and at that stage decide what level of asymmetry — if any — it’s willing to accept, Bloomberg previously reported. Any decision on retaliation would need to be coordinated and agreed with member states.

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Among the US requests are measures relating to quotas for fish exports that EU officials say may be incompatible with World Trade Organization rules; tariff-related moves that aren’t mutual; and a series of demands on economic security described by officials from the bloc as far-fetched, Bloomberg previously reported. 

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Many in the EU expect that most of the US tariffs will remain in place even if a deal is reached, including a 10% baseline tariff. The UK signed an agreement with the US this month that leaves a 10% tariff on nearly all British exports. 

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“I understand that the US is very much working with 10% as a baseline,” EU trade chief Maros Sefcovic said in Berlin Monday. “we are also working on the rebalancing measures, which would protect European businesses and European workers in case” we don’t reach a fair, negotiated solution, he said. 

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One of the sectors that will be exposed in a trade war will be the civil aviation industry. Sejourne said that Toulouse, France-based Airbus SE cannot be subject to “unfair competition” from Boeing, which is headquartered in Arlington, Virginia, because the European aircraft maker faces an additional 10% tariff.