EU strikes back with $27B tariffs as trade tensions rise
The European Commission has announced plans to impose $27 billion in tariffs on American products in response to U.S. tariffs on steel and aluminum. Of course, I will respond," U.S. President Donald Trump commented on Wednesday.
Donald Trump met with Irish Prime Minister Michael Martin at the White House on Wednesday. During their meeting, he was questioned about Washington's potential response to the European Union's retaliatory tariffs, which were announced in response to the U.S. tariffs on steel and aluminum imports. "Of course I will respond," Trump affirmed.
He added that the tariffs the United States will implement in response to the EU's actions will also affect Ireland. He expressed his opinion that the country, through its tax policies, "has taken over the entire American pharmaceutical industry" and criticized the "foolish politicians" in the U.S. who allowed this to happen.
The U.S. president reiterated his intention to impose a series of additional tariffs on April 2nd to equalize the rates applied by other countries. He also mentioned plans to target car imports. When asked about the seemingly chaotic trade policy decisions and frequent reversals of tariff measures, Trump stated that the problem was not inconsistency but rather "flexibility."
"There will be very little flexibility. Flexibility on tariffs, but there will be very little flexibility once we start," he emphasized. April 2nd is anticipated to be a significant day for the United States. According to Trump, the USA will recover much of what has been "stolen from it by other countries and, frankly, by incompetent U.S. leadership," he said.
From Tuesday to Wednesday Eastern Time, 25-percent tariffs on imported steel and aluminum to the United States took effect at midnight. These tariffs apply to goods from all countries worldwide, including European Union member states.
The EU reacted promptly. On Wednesday, following Donald Trump's initiative, the European Commission announced plans to impose retaliatory tariffs on U.S. goods worth $27 billion. The tariffs are expected to be introduced in April in two phases. In the first phase, the EC will reinstate tariffs from Donald Trump's first presidency and then implement new ones, potentially on items like beef and sugar—although the specific list has not yet been disclosed.
"As of this morning, the United States is applying a 25 percent tariff on imports of steel and aluminum. We deeply regret this measure. Tariffs are taxes. They are bad for business and even worse for consumers. These tariffs are disrupting supply chains. They bring uncertainty for the economy. Jobs are at stake. Prices will go up – in Europe and in the United States," emphasized European Commission President Ursula von der Leyen in a statement on Wednesday.
The EU has an "atomic option" up its sleeve
"The European Union could not leave the U.S. decision unanswered," assessed Prof. Łukasz Goczek from the Faculty of Economic Sciences at the University of Warsaw in an interview. "A lack of a possibly symmetrical response would only embolden the tariff aggressor," he explained.
The economist noted that although the EU enjoys a surplus of over $160 billion in goods in the EU-U.S. trade exchange, the United States maintains a favorable balance in services, with a surplus exceeding $107 billion. Therefore, the European Union has an "atomic option": targeting American service providers operating in the European market. This includes streaming platforms, social media owners, and IT solution providers, commonly referred to as big tech companies.
