The announcement of reciprocal tariffs by US President Donald Trump, on Wednesday 2 April (see EUROPE 13613/2) provoked a cascade of reactions throughout the European Union. The EU sees these new tariffs as unjustified and damaging to the economy on both sides of the Atlantic. For the European Commission, which is responsible for the Union’s trade policy, it is a question of keeping a cool head. The European Commissioner for Trade, Maroš Šefčovič, will hold talks with his US counterparts on Friday 4 April, as negotiations to bring down customs duties remain a priority for the EU.
The response can therefore wait a few weeks. The 20% horizontal tariff on EU exports to the US needs to be analysed in depth by the Commission services before they propose a response.
All the more so since the calculation used by the United States to assert that the EU taxes US products at a rate of 39% is not shared by the EU. “We consider that the methodology, if there is one, is neither credible nor justified in arriving at such figures”, said a senior European official. The mathematical formula used was even described as “stupid” by the American winner of the Nobel Prize in Economic Sciences, Paul Krugman, quoted by AFP.
The European Commission estimates that in 2023, US exports to the EU were taxed at an average of just 1.2%. However, the average is not the most representative figure. In fact, certain categories of products - agri-foodstuffs, for example - are subject to a large number of different rates of customs duty, even though exports in these categories do not represent large volumes.
In their calculation, the Americans have taken into account non-tariff barriers such as VAT, which they consider to be a punitive tax on American products, and the presence of European standards that restrict exports of certain agri-food products, for example. Here again, the European Commission does not share this reasoning and considers that none of these measures discriminate against US products.
European countermeasures. For the time being, the Commission is sticking to its first wave of countermeasures, due to be implemented in mid-April (see EUROPE 13598/1, 13604/9), which is a reaction to the steel and aluminium tariffs alone. On Wednesday 9 April, Member States are voting on the list of products that the Commission proposed to tax, under the comitology procedure.
As for what happens next, all options are on the table, confirmed several European sources. Anti-coercion tool, trade rules compliance regulation, measures on US digital services... All these ideas are on the table. But the European Commission is cautious and favours a proportionate response.
The European Commissioner for Prosperity and Industrial Strategy, Stéphane Séjourné, has called a meeting with the Industrial Forum, on Thursday 10 April, to hear from the sectors concerned and discuss future countermeasures.
Many members of the European Parliament have backed a firm response and are defending the use of all available European tools to create a balance of power with the US President.
Calls for non-escalation. Among the flood of reactions after what Donald Trump called ‘liberation day’, a large number of European business representatives called for appeasement. The agri-food sector in particular, but also many other sectors, fear the introduction of tariffs that will directly affect their exports. Together, they are calling on the Commission to renew its efforts to negotiate a solution with the US administration and bring down tariffs.
Cogeca President, Lennart Nilsson, called on the EU and the US to “prioritise negotiations and explore all diplomatic avenues before resorting to measures that could have long-lasting consequences”.
Malte Lohan, CEO of the American Chamber of Commerce to the EU, AmCham EU, directly addressed the EU, which should, in his view, “avoid further escalation of the dispute and instead prioritise creating the environment required for negotiating an exemption from the tariffs”.
The 27 EU Member States continue to call for European unity in the face of Donald Trump, but views on the necessity of a firm response vary from country to country. (Original version in French by Léa Marchal)