Bracing for a Trade War: EU's Countermeasures to Trump's Tariffs Unveiled
- Global readying for Trump's tariffs - EU devising counter-measures
Get ready, folks! As President Trump has announced, novel tariffs on imports to the US will kick off this week, with the EU facing a 20% surcharge on their exports. Even though China will bear higher tariffs, the EU is not backing down. Here's the scoop on how the European Commission plans to hit back.
Initially, all EU imports are subject to the 20% levy. However, it's not just the number game—steel, aluminum, and car imports are tagged with a whopping 25% surcharge, following recent weeks' implementation.
Next week, EU officials might unveil comprehensive counter-tariffs to retaliate, stating, "We expect a second phase of our response to US tariffs," a commission spokesman mentioned in Brussels. Work is ongoing in consultation with the 27 EU member states to ensure this response is "calm", "careful", and "targeted".
On Wednesday, Brussels will vote on the first counter-tariffs, reviving surcharges already imposed by the EU in response to Trump's trade policy during his first term. These tariffs specifically target goods such as Harley-Davidson motorcycles and jeans, with the reimplementation date set for April 15.
Earlier this week, Brussels released a list of additional US goods that could face tariffs up to 25%. Highlights include agricultural products, textiles, steel, and cosmetics, with most going into effect in mid-May. The tariff on almonds, however, won't kick in until December.
In a surprising move, alcoholic beverages like bourbon whiskey—which were set to be targeted—have been pulled from the list due to pressure from wine-exporting countries like France and Italy. Yet, a potential trade war with the US isn't restricted to tariffs; simultaneously, EU trade ministers debated a possible approach against US digital giants like Apple, Google, and Meta.
Alas, a negotiated solution seems elusive. Trump rejected the EU's proposal for the abolition of all mutual tariffs on industrial goods, while he continues to demand massive gas imports to Europe. Meanwhile, the EU commission president warned Chinese Premier Li Qiang of potential escalation, whereas China has vowed to "fight to the end" in the trade dispute with the US.
The trade dispute between the US and China has seen recent escalations, with Trump imposing tariffs of 20% and an additional 34% last week. Beijing responded with 34% surcharges, set to take effect on Thursday. With tensions remaining high, Trump has even threatened additional 50% tariffs on China's products.
Meanwhile, countries in the Association of Southeast Asian Nations (ASEAN) like Vietnam are tirelessly working to secure lower US import tariffs. On this matter, Vietnam's Prime Minister Pham Minh Chinh declared plans for a bilateral agreement with the US aimed at achieving a sustainable trade balance.
In the equities market, both Asia and Europe have regained momentum after recent losses. The German stock index (DAX) soared by approximately 2.3% in the afternoon, while London, Paris, and Milan saw gains over two percent each by early afternoon. The Nikkei index in Japan, as well as stocks in Seoul and Hong Kong, also finished the day in the green.
Key Players:
- Donald Trump, US President
- EU
- US
- China
- Trump's Tariffs
- European Union
- Retaliatory Tariffs
- Counter-Tariffs
Enigma wrapped in Tariffs:Initially, the EU proposed tariffs of up to 25% on American goods. When Trump paused tariffs for 90 days, the EU did the same for their counter-tariffs. Goods like bourbon, wine, and dairy products were initially considered for tariffs but have been removed from the list.
EC countries are expected to cooperate closely in the implementation of the counter-tariffs against the US, as stated by EU officials. The proposed counter-tariffs target a variety of American goods, including Harley-Davidson motorcycles, jeans, agricultural products, textiles, steel, cosmetics, and even bourbon whiskey, although alcoholic beverages have been reconsidered due to pressure from wine-exporting countries. However, the tariff on almonds is set to be imposed only in December.
In response to US tariffs, the EU is warning of a second phase of their retaliation, indicating that more counter-tariffs may be on the horizon in the upcoming weeks. This follows Trump's announcement of novel tariffs on EU imports, which will prompt a 20% surcharge on European exports to the US, with higher tariffs for steel, aluminum, and car imports.
The EU Commission is working diligently with the 27 member states to ensure that their response to US tariffs is strategically targeted, calm, and carefully thought out, aiming to maintain a semblance of cooperation with the countries of Central and Eastern Europe and the countries of Eastern Europe throughout the process.
