EU and US brace for retaliatory tariff showdown
The European Commission has announced it will impose tariffs on American products worth approximately £22 billion in response to the implementation of U.S. tariffs on steel and aluminium. "Of course I will respond," U.S. President Donald Trump said on Wednesday.
Donald Trump met with Irish Prime Minister Michael Martin at the White House on Wednesday. During the meeting, he was asked whether Washington would respond to the European Union's retaliatory tariffs announced in reaction to the U.S. tariffs on steel and aluminium imports. "Of course I will respond," Trump stated.
He added that the tariffs the United States will impose on the EU for its retaliatory tariffs will also affect Ireland. He opined that this country "has taken over the entire American pharmaceutical industry" through tax policies and "foolish politicians" in the U.S. who allowed it.
The U.S. President reiterated that he intends to impose additional tariffs on 2nd April to equalise the rates other countries apply. He also mentioned the intention to impose tariffs on car imports. When asked about the chaotic trade policy decisions and frequent retreats from tariff decisions, Trump said it was not inconsistency, but "flexibility."
"There will be very little flexibility. Flexibility on tariffs, but there will be very little flexibility once we start." 2nd April will be a critical day for the United States of America. He stated that the USA will recover much of what has been taken from it by other countries and, honestly, by incompetent U.S. leadership.
On Wednesday, at 4 AM GMT, 25-percent tariffs on imported steel and aluminium to the USA went into effect. These tariffs applied to goods from all countries worldwide, including European Union member states.
The EU reacted swiftly. On Wednesday, in response to Donald Trump's move, the European Commission announced it would impose retaliatory tariffs on U.S. goods worth approximately £22 billion. The tariffs are to be introduced in April, in two phases. In the first phase, the EC will reinstate tariffs from the time of Donald Trump's first presidency, and then impose new ones, e.g., on beef and sugar - although the exact list is not yet known.
"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." highlighted 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. "A lack of possibly symmetrical response would only embolden the tariff aggressor," he explained.
The economist reminded that although the EU has a surplus of over £130 billion in goods in the EU-U.S. trade exchange, the United States has a favourable balance in services, with a surplus of over £87 billion. Therefore, the European Union has an "atomic option" in store: a strike on American service providers operating in the European market. This refers to streaming platforms, social media owners, and IT solution providers, i.e., the so-called big tech companies.
