EU Warns Trump’s Tariff Threat Is Danger to Transatlantic Trade

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(Bloomberg) — Donald Trump’s proposed 30% tariff on European Union goods is “effectively prohibitive” to transatlantic trade and could warrant retaliation, the bloc’s chief negotiator said.

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Briefing reporters in Brussels on Monday before a gathering of trade ministers, Maros Sefcovic warned that counter measures may be on the table as an option to strike back against the US president’s levies.

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“The current uncertainty caused by unjustified tariffs cannot persist indefinitely,” he said. “Therefore we must prepare for all outcomes, including — if necessary — well- considered, proportionate counter measures to restore the balance in our transatlantic relationship.” 

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The trade commissioner for the EU is set to speak with American counterparts later on Monday, following Trump’s warning of tariffs of 30% on its exports to the US starting on Aug. 1. 

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Sefcovic’s remarks point to the danger of escalation in a standoff over bilateral ties that Brussels officials assess to be the world’s most significant for commerce and investment.

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“We feel a huge responsibility for the biggest trading relationship on this planet,” Sefcovic said, stressing that the EU wants a negotiated solution. “We’re showing this enormous patience, enormous creativity to find the solutions,” he added.

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Pressure to change tactics is mounting, not least from France. In a toughening of tone, Economy Minister Laurent Saint-Martin, said that the bloc should now be open to a more robust response. 

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“The priority is for the EU to remain united,” he said. “But obviously the situation since Saturday should lead us to change method. We must present in a concrete and clear way the capacity of the EU to put counter measures on the table, to retaliate.”

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He also noted that any action could include the option of hitting services, and deployment of the anti-coercion instrument, the EU’s most powerful trade tool. That measure has never been used until now.

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The EU is set to extend a suspension of tariffs on €21 billion ($24.5 billion) of US steel and aluminum products, in a sign that Brussels wants to avoid an immediate escalation. 

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The bloc has another retaliatory package ready on about €72 billion of goods, as well as some export controls, that will be discussed by member states today. 

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Ministers attending the Brussels gathering expressed both surprise and resolve in the wake of Trump’s tariff threat issued on Saturday.

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“The USA is taking a risk,” said Finnish Foreign Trade Minister Ville Tavio, warning that any counter measures would hit the US economy. “The talks cannot be one-sided,” he added.