Summary of Potential EU Response to Trump’s tariff Threat
Here’s a breakdown of the potential consequences and EU responses to Trump’s proposed 10% tariff on goods from the EU, based on the provided text:
The Threat:
* Trump is threatening a 10% tariff on EU goods, potentially disrupting billions in trade and triggering a trade war.
* even if existing tariffs are challenged in the Supreme Court, the Trump management intends to find other ways to impose levies.
EU Responses (in escalating order of severity):
- Retaliatory Tariffs: The EU has a prepared list of $108 billion worth of U.S. exports (around 4,800 items like whiskey, soybeans, aircraft, and automobiles) ready to be hit with reciprocal tariffs, set to take effect February 7th unless blocked by the European Parliament.
- Suspension of Trade Deal: France supports suspending the U.S.-EU trade deal in response to Trump’s actions.
- “Trade Bazooka” (Anti-Coercion Instrument): This is a more powerful tool adopted in late 2023. It allows the EU to impose broader economic restrictions beyond just tariffs, including:
* Import/export quotas
* Restrictions on financial market access
* Suspension of intellectual property rights.
* Caution: Experts warn this could cause a US recession and a global downturn. Activation is a lengthy process (up to 10 months).
- Dumping U.S. Assets: (Mentioned in the initial bullet points, but not elaborated on in the provided text) This is a possibility, but carries notable economic risks for both sides.
Overall Stance:
* The EU states it is prepared to respond “unflinching, united and proportional” to any tariffs imposed.
* However,the EU’s priority is to engage and avoid tariff imposition,recognizing it would harm businesses and consumers on both sides of the Atlantic.
