Europe Gears Up for Potential Tariff Battle with US if Trump Regains Power

As the possibility of Donald Trump returning to the White House looms, the European Union is reportedly preparing a list of American goods that could be targeted with tariffs. This move is in anticipation of Trump's potential threat to impose punitive trade measures on the bloc, a threat he has made clear in the past.

EU's Preemptive Measures

According to sources close to the EU's decision-making process, new levies against US firms are not the EU's primary plan, but rather a retaliatory measure against any actions taken by the US. This is seen as a clear message to Trump, who is currently running for president again. This move by the EU is seen as bold, especially considering the current trade dynamics between Europe and the US, with Europe exporting significantly more to the US than it imports.

Previous Tariffs and Their Impact

In 2018, Trump surprised the EU by imposing tariffs on European steel and aluminum exports. In response, the EU targeted politically sensitive US companies with retaliatory duties, including Harley-Davidson motorcycles and Levi Strauss jeans. Since Trump's 2016 victory, the EU has adopted several trade defense tools, including an instrument to respond to economic coercion.

Trump's Stance on Tariffs

Trump has made his stance on tariffs quite clear, stating in an interview that the word 'tariffs' is his favorite. He has expressed his desire to impose broad tariffs against trading partners if he wins the election. He has also indicated that he would target countries like China with tariffs ranging from 60% to 100%, and a 10% across-the-board tariff on imports from other countries. He could also impose counter-measures against European digital services taxes that implicitly target US technology giants.

EU's Assessment of Election Impact

The EU is currently preparing an impact assessment of the potential consequences of the upcoming US election, focusing particularly on the scenario where Trump emerges victorious. Regardless of the election outcome, trade relations with the US will be a top priority for the EU. If Kamala Harris wins, the EU will aim to resolve several issues left unresolved during Biden’s presidency, such as a permanent deal to remove the remaining steel and aluminum tariffs.

Views on Trump's Tariffs

Harris has criticized Trump’s tariffs, describing them as a tax on American consumers. However, Biden, who was overthrown by Harris in a quiet palace coup in July, has refused to drop any of them. Despite Biden’s rhetoric being more conciliatory than Trump’s, EU officials are aware that his trade policy shares similarities with Trump’s ‘America First’ approach.

Bottom Line

The potential for a tariff war between the EU and the US is a serious concern, with significant implications for global trade. It's clear that the EU is preparing for all eventualities, but the question remains: how will this impact international relations and economies? We'd love to hear your thoughts on this matter. Please share this article with your friends and sign up for the Daily Briefing, which is delivered every day at 6pm.