Trump declares a 25% tax levied on EU-origin merchandise
Trump's escalation continues, this time targeting the EU with a proposed 25% tariff on their goods. "Get ready, it'll be around 25%," Trump announced at a White House cabinet meeting, including cars and other items in the crosshairs. The impending tariffs echo Trump's previous threats towards Mexico and Canada, both of which subsequently felt the pinch.
The prospect of US tariffs has sparked a "determined and swift" EU response. EU Trade Commissioner Maros Sefcovic warned that retaliatory measures would be necessary to protect European interests, inevitably creating trade barriers for companies and employees on both sides.
Tariffs could wreak havoc for American businesses, driving up consumer costs and introducing supply chain disruptions. Retaliation from the EU might target U.S. exports, affecting industries like agriculture and tech.
If the EU decides to put up its own walls, potential retaliatory measures include counter-tariffs on symbolic products like bourbon whiskey or strategic sectors such as chemicals. Restrictions on US tech services, leveraging the EU's trade deficit in services, are also on the table. For more extreme actions, the EU might utilize its Anti-Coercion Instrument (ACI) to impose restrictions in response to economic coercion. Finally, the EU could file complaints with the World Trade Organization if it deems US tariffs as violating international trade rules.
The looming trade war between the US and EU could result in economic losses for both, disrupt global trade, and potentially see a shift in trade partners as both sides seek diversification. As US-EU tensions intensify, businesses and consumers might feel the pinch as trade barriers disrupt global supply chains and inflate consumer costs.
The EU Trade Commissioner, Maros Sefcovic, indicated that reciprocal retaliatory measures could be implemented due to the proposed 25% tariffs, aiming to safeguard European interests. Other industries may also feel the impact of these tariffs, as potential counter-measures from the EU could target US exports, affecting sectors like agriculture and technology. The EU has various options at its disposal, such as imposing counter-tariffs on symbolic products or leveraging its trade deficit in services to restrict tech services, if necessary.