EU hits back at Trump tariffs and warns against trade war

In Brussels, it was just after 06:00 on Wednesday. But it was midnight in Washington DC when President Donald Trump’s 25% tariffs on steel and aluminium took effect on major US trading partners.

It took less than 10 minutes for the European Union to respond.

“Tariffs are taxes. They are bad for business, and worse for consumers,” said European Commission President Ursula von der Leyen.

The EU’s initial countermeasures will take effect on US products on 1 April, ranging from jeans and motorbikes to peanut butter and bourbon, just as they were with the Trump administration’s first tariffs in 2018 and 2020.

But there will be more to come in mid-April. A whole swathe of textiles, home appliances, food and agricultural products could be included, depending on a two-week consultation with stakeholders.

A list of items almost 100 pages long is being circulated that features meat, dairy, fruit, wine and spirits, toilet seats, wood, coats, swimwear, nightdresses, shoes, chandeliers and lawnmowers.

For consumers, higher prices loom on Europe’s supermarket shelves, especially for American products. But for businesses and some industries, especially steel, there is real danger.

The head of Germany’s BGA federation of wholesale, foreign trade and service, Dirk Jandura, warned that Germans might have to dig deeper into their pockets to pay for American products in the supermarkets.

Orange juice, bourbon and peanut butter were the most likely products to be hit. “Margins in trade are so low that this cannot be absorbed by the companies,” he said.

In total, the EU will target €26bn (£22bn) of US exports.

“We’re not going to go into hypotheticals other than to say we’ve been preparing assiduously for all these outcomes,” said EU spokesman Olof Gill.

António Costa, the EU’s Council President, called on the US to de-escalate, although there was little sign of that on Wednesday, as Trump vowed to hit back at the EU’s countermeasures.

“We’ve been abused for a long time and we will be abused no longer,” he said.

In Austria too, there was concern about the escalation.

“The US is the second most important export market for Austrian products after Germany – and the most important for Germany,” said Christoph Neumayer, who is head of the Federation of Austrian Industries. It was “essential that Europe acts together and decisively”, he added.

One EU official pointed out that products such as soybeans and orange juice could easily be sourced from Brazil or Argentina, so consumers would not be hit too hard.

And there was a suggestion that some of the US exports targeted were also from US states under Republican control: soybeans from Louisiana or meat from Nebraska and Kansas.

A relatively large number of US exports enter the EU via the Dutch port of Rotterdam or Antwerp in Belgium.

Dutch Economic Affairs Minister Dirk Beljaarts said nobody stood to benefit from a “tariffs war”, but he was hopeful it would not hit his own country’s economy too hard: “It has an impact on companies and consumers – particularly consumers in the US.”

One area that will be hit especially hard on both sides of the Atlantic is in the drinks sector.

Pauline Bastidon of Spirits Europe said producers in the EU and US stood united, with risks facing European companies that produced US spirits and US companies that were heavily invested in Europe.

Chris Swonger, of the US Distilled Spirits Council, said that in the three years since the suspension of the EU’s earlier 25% tariff on American whiskey, US distillers had “worked hard to regain solid footing in our largest export market”.

Reimposing tariffs from 1 April was “deeply disappointing” and he called for a return to “zero-for-zero” tariffs.

For cognac producers in France, the prospect of a 25% US import tax is also a major problem as most of their produce is for export, either to the US or China.

French producers have already been hit by Chinese measures that have slapped heavy taxes on cognac.

“Morale is down in the dumps,” Bastien Brusaferro of the general winegrowers’ union told France Info.

Thousands of jobs are at stake in the Charente region alone, he says: “Cognac is a product that’s made for export.”

There was a dire warning too from the head of the European Steel Association, Henrik Adam.

“President Trump’s ‘America First’ policy threatens to be a final nail in the coffin of the European steel industry,” he warned.

Trump’s initial tariffs on European steel in 2018 saw EU steel exports to the US fall by more than a million tonnes, and for every three tonnes of steel that did not enter the US, two-thirds of it entered the EU instead.

“These new measures imposed by Trump are more extensive, therefore the impact of the US tariffs is likely to be far greater.”