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EU Signals Shift Towards Retaliation as Trump Tariffs bite
Brussels is preparing a robust response to US trade measures, with a growing sentiment for action over continued negotiation.
The European Union is signaling a notable shift in its stance on trade relations with the United States, with a clear indication that patience is wearing thin regarding the impact of American tariffs. “We don’t want a trade war, but we don’t know if the US will leave us a choice,” stated one EU diplomat, reflecting a hardening attitude within the bloc.This sentiment is echoed by a second EU diplomat who observed, “the mood has clearly changed” in favour of retaliation. “We are not going to settle at 15 per cent,” they added, indicating a rejection of any proposed compromise at that level.
The current trade tensions were ignited in early April when President Donald Trump imposed high “reciprocal” tariffs on nearly all US trading partners. While these were subsequently lowered to 10 per cent for a 90-day period,their economic impact continues to be felt.
Despite global stock market turmoil initially triggered by these measures, US stocks have experienced a surge to record highs since April. Traders appear to have largely discounted President Trump’s recent threats to escalate tariffs on major economies,including Japan,South Korea,and Brazil.
Economists have raised concerns that President Trump’s trade policies could fuel inflation within the US. However, the president has seemingly been encouraged by only a marginal increase in the US monthly consumer price index this month.
Meanwhile, the United States has benefited from increased customs revenue, collecting nearly $50 billion (€43 billion) in the second quarter. Crucially, this period saw the US largely avoid widespread retaliatory measures from its moast significant trading partners.
The EU has, in turn, formulated several packages of counter-tariffs. However, the implementation of these measures has been repeatedly postponed, with their activation tied to President Trump’s August 1st deadline for further talks.
These planned retaliatory duties include levies on approximately €21 billion of annual US imports, such as chicken and jeans, which are slated to come into effect on August 6th.
The European Commission,responsible for the EU’s trade policy,has also proposed further retaliation targeting €72 billion of annual US imports. This proposed package includes duties on key American products like Boeing aircraft and bourbon, should negotiations fail.
Furthermore,the Commission is reportedly preparing a third list of measures that would extend to services. Sources familiar with the latest proposal suggest it would encompass levies on digital services and online advertising revenue, signaling a broader scope for potential EU action.
The scale of US tariffs on the EU is substantial, covering €380 billion of annual EU exports out of a total of €532.3 billion. The United states remains the EU’s largest single market, accounting for a significant one-fifth of its exports.
The European Commission declined to comment on the ongoing developments.
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