The European Union (EU) is gearing up to retaliate against the United States. The tariff dispute is still unsettled, leading to threatened or implemented trade retaliation. European Commission President Ursula von der Leyen recently stated, “We believe there are good deals to be made for the benefit of consumers and businesses on both sides of the Atlantic.” She added, “At the same time, we continue preparing for all possibilities.”
Since mid-March, the US has implemented a series of tariffs, impacting a significant amount of EU exports. This excludes a massive 10% blanket tariff on all imports from the EU and an extremely high 25% tariff on aluminium, steel, and cars. All of these measures combined have had a tremendous effect on expanding their trade. Currently, roughly 70% of EU exports to the US are affected by these tariffs. As bad as things are, they’ll likely get even worse, as additional US investigations could result in tariffs rising even higher — potentially up to 97%.
In response, the European Commission has announced its intention to act and break the spiral of escalating trade disputes. They intend to contest the blanket tariffs and auto tariffs at the World Trade Organization (WTO). A few days ago, the Commission released a new list of US products that might be subject to possible tariffs. Relevant EU industries may submit their comments on this provisional list until June 10. Beyond this very long list, there is additional approval needed from EU member states before any major final action is taken.
The targeted US products include a range of agri-food items such as processed fruits, nuts, vegetables, and fish, as well as industrial products like automobiles, electrical equipment, engines, and machinery. Interestingly enough, Boeing made the list of products that would be subject to retaliation by the EU.
The Commission’s proposed countermeasures go further than retaliatory tariffs. This report confirms that the EU will be able to restrict certain exports of steel scrap and chemical products to the US. The value of these exports is approximately €4.4 billion. That said, it needs to be underscored that US services are in no way under siege from these proposed EU retaliatory measures.
Communications between the two sides have continued. The European Union should continue to monitor the negotiations and remain prepared to act if these negotiations fail to produce an appropriate result. The stakes are high for both economies. These proposed trade measures would have a radical impact on consumers and businesses on both sides of the Atlantic.
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