In response to President Donald Trump's recent imposition of tariffs—including a 25% duty on steel, aluminum, and cars, and a 20% tariff on most other products—the European Union proposed a "zero-for-zero" agreement aimed at eliminating tariffs on industrial goods between the two economies. European Commission President Ursula von der Leyen emphasized the EU's readiness to negotiate, stating, "We stand ready to negotiate with the U.S."
However, President Trump dismissed the EU's proposal as inadequate, asserting that it fails to address the substantial trade imbalance between the U.S. and the EU. He highlighted the $350 billion trade deficit and underscored his commitment to reducing it by promoting increased American energy exports. Trump maintained that existing tariffs, including a 25% tax on foreign-made cars and a new 10% base tariff, are likely to remain unless more favorable agreements are reached.
The EU's strategy involves leveraging the negative impact of Trump's tariffs on U.S. financial markets, where stocks have already lost $5 trillion, to foster domestic opposition to the tariffs. European trade ministers convened to coordinate responses, considering potential retaliatory measures targeting American services, particularly in the tech and public procurement sectors, where the U.S. holds a €109 billion surplus. While France advocates for a firm response, including the possible invocation of the anti-coercion instrument, Italy and Spain prefer a more cautious approach.
Despite the EU's preference for dialogue over retaliation to avoid escalating into a trade war, it has prepared an initial set of countermeasures targeting $28 billion of U.S. exports, including items ranging from dental floss to diamonds. The EU is also considering a broader response by the end of April, though views vary on invoking the Anti-Coercion Instrument, which could target U.S. services. Some member states, like France and Italy, have expressed concern over potential U.S. retaliatory tariffs, such as a threatened 200% levy on EU alcohol.
The ongoing trade tensions have unsettled global markets and strained U.S. relations with key allies, stirring fears of significant economic impacts worldwide. Despite the retaliatory rhetoric, most affected nations advocate for negotiation and selective targeting to avoid a full-scale tariff war.