EU Responds to Trump Tariffs and Cautions Against Trade War

The clock struck just after 06:00 in Brussels on Wednesday, coinciding with midnight in Washington DC as the US administration activated a 25% tariff on steel and aluminum against its major trading allies.

The European Union wasted no time in retaliating, responding in under ten minutes.

“Tariffs are merely taxes. They hinder business and adversely affect consumers,” stated Ursula von der Leyen, President of the European Commission.

The EU’s immediate repercussions will target a variety of American goods starting on April 1, including jeans, motorbikes, peanut butter, and bourbon, mirroring previous actions taken during Trump’s first set of tariffs in 2018 and 2020.

Further measures are on the horizon for mid-April, with a broad range of textiles, home appliances, and food items potentially facing tariffs, contingent upon a two-week stakeholder consultation.

A nearly 100-page document detailing affected items is being circulated, encompassing products such as meat, dairy, fruits, wines, spirits, toilet seats, wood, coats, swimwear, nightdresses, shoes, chandeliers, and lawnmowers.

Consumers can anticipate rising prices on supermarket shelves in Europe, particularly concerning American imports. Conversely, certain industries, particularly steel, face significant risks.

Dirk Jandura, head of Germany’s BGA federation for wholesale, foreign trade, and service, cautioned that German consumers might need to pay more for American goods at local stores.

Products like orange juice, bourbon, and peanut butter are among those most likely to be impacted. “Profit margins are so slim in trade that companies cannot absorb these increases,” he explained.

The EU’s tariffs will aim at €26 billion (£22 billion) worth of exports from the US.

“We’re not venturing into hypothetical scenarios, other than to affirm our thorough preparations for every possible outcome,” remarked EU spokesperson Olof Gill.

António Costa, the EU Council President, urged the US for de-escalation, yet on that Wednesday, Trump indicated that he would retaliate against the EU’s countermeasures.

“We’ve endured abuse for too long, and we will accept it no more,” he declared.

Concerns also emerged from Austria regarding the escalating trade tensions.

“The US ranks as Austria’s second most significant export market after Germany, which — in turn — is the most crucial for Germany,” stated Christoph Neumayer, head of the Federation of Austrian Industries. He emphasized the need for a unified and decisive European response.

An EU official highlighted that items like soybeans and orange juice could be easily sourced from Brazil or Argentina, so consumers might not experience significant impacts.

Additionally, it has been pointed out that many targeted US exports come from states governed by Republicans, such as soybeans from Louisiana or meat from Nebraska and Kansas.

A substantial volume of US exports to the EU pass through the Dutch port of Rotterdam or Belgium’s Antwerp.

Dirk Beljaarts, the Dutch Economic Affairs Minister, noted that no one would gain from a “tariff war,” but he was optimistic that its effects wouldn’t be too severe for his nation: “It impacts companies and consumers – especially those in the US.”

The drink sector, however, is expected to face substantial repercussions on both sides of the Atlantic.

Pauline Bastidon of Spirits Europe mentioned that both EU and US producers face risks, notably for European firms producing American spirits and US companies invested heavily in Europe.

Chris Swonger from the US Distilled Spirits Council expressed disappointment at the reimposition of tariffs starting April 1, stating that it hindered the recovery efforts of US distillers in their largest export market. He advocated for a return to “zero-for-zero” tariffs.

For French cognac producers, a 25% US import tax poses significant challenges, primarily since most production is destined for exports to the US or China.

Chinese tariffs have adversely affected French producers, particularly impacting cognac.

Bastien Brusaferro, from the general winegrowers’ union in France, lamented that morale is low, with thousands of jobs at risk in the Charente region: “Cognac is meant for export.”

Henrik Adam from the European Steel Association also issued a grave warning.

“President Trump’s ‘America First’ agenda could be the final blow for the European steel industry,” he cautioned.

After Trump’s original steel tariffs in 2018, EU steel exports to the US plummeted by over a million tonnes, with two-thirds of that volume redirected to the EU.

“Given the more extensive nature of these new measures, the consequences of the US tariffs are likely to be significantly greater.”