EU Vows Action If Trump Adopts Car Tariffs, But Urges Restraint

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(Bloomberg) — Europe will consider all retaliatory options should US President Donald Trump follow through on his threat to raise tariffs on cars and trucks from the European Union to 25%, the bloc’s finance ministers said.

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But, if possible, it would like to stick with an existing US-EU trade deal.

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“Our path is clear, we don’t want an escalation, we want a joint solution with the Americans,” said German Finance Minister Lars Klingbeil, who is also vice-chancellor. However, he added, “we would be prepared if an escalation were to occur.”

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The spat has added to tensions over a much-delayed transatlantic trade pact. The two sides initially reached an agreement last July, but EU lawmakers have yet to ratify the pact as they seek further amendments. Trump claimed on Friday that the EU had failed to fully comply with a trade pact. 

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Officials — commenting ahead of a meeting of euro-area finance chiefs in Brussels — refuted that on Monday, arguing the bloc was simply going through its legislative process and still wanted to adopt the deal. 

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“Any other option is on the table if need be,” said French Finance Minister Roland Lescure. “But we want to focus on the deal we signed and to make sure that deal and only that deal is implemented.”

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Several ministers stressed the need to not overreact to any individual Trump threat, arguing it would only put further strain on the transatlantic trade relationship.

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“It’s very important to keep a cool head,” said Dutch Finance Minister Eelco Heinen. He emphasized that the US-EU trade agreement is vital for the bloc, a sentiment echoed by his Belgian counterpart, Vincent Van Peteghem. 

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Still, Lithuanian Finance Minister Kristupas Vaitiekunas cautioned that Europe must be prepared, given Trump has years left in office.

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“Pressure from both sides will be constant during this administration,” he said. “We will be in this game for the whole term of President Trump and we have to find countermeasures for these tariffs.”

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Even before Friday’s threat, the EU was unhappy with the US tariffs on steel and aluminium products despite a recent revision by the Trump administration, as nearly half of the EU exports using these metals would end up having higher duties. Although both sides agreed to continue talks to address this long-standing irritant since the agreement was reached, the European Commission told EU envoys last week that it’s ready to respond if necessary.

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“The number one choice is always dialog — we want to be a predictable partner in the international economy, we believe in the transatlantic relationship,” Eurogroup President Kyriakos Pierrakakis told Bloomberg Television’s Oliver Crook on Monday, shortly before finance ministers gathered in Brussels. “But having said this, if there is a deviation from what we have agreed upon, obviously all options are on the table and all choices will be on the table.”

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Trump’s latest tariff salvo renewed a contentious trade fight with a major economic bloc even as the Iran war and the resultant spike in energy prices place fresh strains on the global economy. 

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“Needless to say, this discussion that’s currently taking place is quite unnecessary and quite unfortunate,” said Pierrakakis, who also is Greece’s finance minister. “The last thing the global and the European economy needs right now is an extra layer of uncertainty on top of what’s happening in the Strait of Hormuz and in the Middle East.”

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—With assistance from William Horobin and Daniel Basteiro.

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