EU Plans Tariff Strategy if Trump Returns to White House
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The European Union has prepared a list of American goods it could target with tariffs if former President Donald Trump wins the U.S. election and follows through on his threat to hit the bloc with punitive trade measures.
New levies against U.S. firms aren’t a base case for the EU and will only be used to retaliate against a move by the White House, according to people familiar with the bloc’s thinking.
The EU’s favored approach would be to seek an agreement with Trump on some areas of common interest such as China, said one of the people, who spoke on the condition of anonymity.
Trump caught the EU by surprise in 2018 when he hit European steel and aluminum exports with tariffs. In that instance, the bloc targeted politically sensitive companies with retaliatory duties, including Harley-Davidson Inc. motorcycles and Levi Strauss & Co. jeans. Since Trump’s win in 2016, the EU has adopted several trade defense tools, including an instrument to respond to economic coercion.
“To me, the most beautiful word in the dictionary is ‘tariffs,’ ” Trump said Oct. 15 in an interview with Bloomberg News Editor-in-Chief John Micklethwait. “It’s my favorite word.”
(Eurostat via Bloomberg)
Trump has said that as president, he would target countries like China with tariffs anywhere from 60% to 100%, with a 10% across-the-board tariff on imports from other countries. He could also impose counter-measures against European digital services taxes that implicitly go after U.S. technology champions.
“Our allies have taken advantage of us. More so than our enemies,” Trump said. “Our allies are the European Union. We have a trade deficit of $300 billion with the European Union.”
Bloomberg reported earlier this year that the EU was preparing an impact assessment of the consequences of the November ballot, paying particular attention to the scenario in which Trump emerges as victor.
US-EU Relations
A Bloomberg News/Morning Consult poll conducted last month shows Vice President Kamala Harris and Trump in tight races in the seven states most likely to decide the election.
Regardless of who wins the election, trade relations with the U.S. will be a top priority. In the event of a Harris win, the EU will seek to sort out several of the irritants left unsolved during Biden’s presidency such as a permanent deal to get rid of the remaining steel and aluminum tariffs, said the person.
Harris has cast Trump’s tariff proposals as a tax on American consumers, and critics have challenged the former president’s claims that the penalties could offset the cost of a bevy of corporate and income tax cuts he’s proposed.
Even though President Joe Biden’s rhetoric has been more conciliatory than Trump’s, and his alignment with the EU over Ukraine has helped to repair the transatlantic relationship, EU officials remain conscious that his trade policy still has much in common with his predecessor’s ‘America First’ approach.
The Europeans were shaken, in particular, by Biden’s $390 billion-plus subsidy program to support green technology, which offers companies an incentive to shift investment from Europe to the U.S.
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