The EU's response to Donald Trump's so-called "retaliatory" tariffs may be subdued, but it is designed to hit the US where it hurts most.
As the second wave of Trump's tariffs took effect today, the European Commission is preparing, according to an internal document seen by Politico, retaliation of up to 25% on a wide range of US imports, worth about $22,1 billion based on EU imports last year.
The list includes agricultural and industrial products, such as soybeans, meat, tobacco, iron, steel and aluminum - to hit sectors of the American economy that rely more on their exports to the EU in a passive-aggressive move to "hurt" the Republican president's base of supporters.
Today, EU member states approve the list of American products that will be subject to tariffs
EU member states will vote today on the list of American products that will be subject to retaliation and no major objections are expected.
Once they approve the list, a first batch of tariffs on goods such as cranberries and orange juice will go into effect on April 15. These are tariffs that the EU initially imposed in 2018, during Trump's first term in the White House, but suspended in 2021.
Then, from May 16, a 25% tariff will be imposed on a second batch of imported American goods, including steel, meat, white chocolate and polyethylene. Finally, a 25% tariff on almonds and soybeans will take effect from December 1. In total, the EU tariffs are set to hit up to $13,5 billion worth of imports from Republican-controlled US states, according to the report.
A blow to states controlled by Trump's Republicans
The EU list includes soybeans, which are of great economic and symbolic importance to Republican-controlled states. The US is the world's second-largest producer and exporter of soybeans, and the EU tariffs would hit a sector already battered by Chinese retaliation, increasing global competition and falling prices.
As Politico notes, 82,5% of US soybean exports to the EU come from Louisiana, the home state of Republican House Speaker Mike Johnson. Unsurprisingly, US soybean producers last month criticized Trump’s trade war, urging the administration to “reconsider tariffs [against Canada, Mexico and China] and potential upcoming tariffs,” although the White House occupant has so far appeared unconvinced.
The EU is also targeting beef from Kansas and Nebraska, poultry from Louisiana, auto parts from Michigan, cigarettes from Florida and wood products from North Carolina, Georgia and Alabama. While the Commission removed bourbon from the final draft after pressure from France, Italy and Ireland, the list includes other more specific products to hit exporters in Republican-controlled states, such as ice cream from Arizona, electric blankets from Alabama, ties and bow ties from Florida and washing machines from Wisconsin.
High price for the USA
The price the US will pay for Trump's trade war will be high after countermeasures from Canada and China. In total, the retaliation from these two countries and the EU will hit US exports worth almost $90 billion.
China has primarily targeted U.S. production, imposing a 15% tariff on products such as chicken, wheat and corn, along with 10% on soybeans, meat, fruit and other agricultural products. Canada, meanwhile, has imposed two sets of tariffs - 25% on a range of agri-food products and also 25% on steel and aluminum products.
For its part, the EU has experimented with a “carrot and stick” approach to send a message that it will not bow to Trump’s demands while leaving the door open for negotiations. On Monday, the bloc proposed a “zero tariff” plan for industrial goods, including cars, pharmaceuticals, chemicals, plastics and machinery. A measure that is seen as easily acceptable, as transatlantic tariffs on these products are already low.
However, Trump was not satisfied with the proposal and called on EU member states to purchase $350 billion worth of American energy products, which would "erase the trade deficit in a week."
As a last resort, the EU could deploy the "trade bazooka" of the Anti-Coercion Instrument (ACI), which would authorize its executive branch to target American services, such as technology and banks, and escalate the trade war to another level, something that not all EU member states are yet ready to approve.
Source: iefimerida.gr
