EU Readies U.S. Tariffs

Above: Ursula von der Leyen. Photographer: Etienne Ansotte. European Union, 2020. Source: EC - Audiovisual Service

The European Union says it is readying tariffs on U.S. imports in a tit-for-tat response to a U.S. decision to impose a 25% tariff on aluminium and steel.

"I deeply regret the US decision to impose tariffs on European steel and aluminium exports," European Commission President Ursula von der Leyen said in a statement. "Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures."

Separately, German Chancellor Olaf Scholz said that if the U.S. "leaves us no other choice, then the European Union will react to this as one. As the largest market in the world with 450 million citizens, we have the strength to do so."

The EU's response marks a further escalation in a trade war initiated by U.S. President Donald Trump's attempts to rebalance global trade in favour of U.S. producers.

It is reported that the EU has prepared multiple lists of American goods to hit with retaliatory tariffs.

However, the details will be kept secret and will only be revealed when the EU reacts to a broader set of tariffs that the U.S. is expected to announce soon.

During Trump's first presidency, he imposed tariffs on steel and aluminium imports, saying the move was designed to protect U.S. national security as these were core industries.

The EU retaliated by imposing sanctions on U.S. goods such as Harley-Davidson motorcycles and whiskey.

Financial markets have shown little reaction to signs the EU is willing to go toe-to-toe with the U.S. and engage in an all-out trade war.

"A hallmark of Trump's tenure in the White House has been his use of tariffs to project his America First policy; but a hallmark of the market response to these efforts is that any market weakness tends to ultimately fade before long," wrote Pound Sterling Live in June 2020, covering the imposition of another set of U.S. tariffs on EU goods.

All signs point to a similar playbook being followed during Trump's second term.