The European Union and the UK have prepared countermeasures in case US President Donald Trump increases tariffs on goods from European countries. According to a report by Politico, citing informed sources, the EU and the UK have spent months simulating scenarios of a trade war and have prepared a catalog of measures in case of an emergency.
Despite these preparations, EU and British officials still hope that Trump will not harm European exports. If a trade war does occur, they will have a comprehensive arsenal of countermeasures at their disposal, including retaliatory tariffs.
European leaders are also considering how to approach future negotiations with Trump and demonstrate their support for Ukraine.
Trump has previously mentioned the $300 billion trade deficit with the EU and hinted at imposing tariffs on European goods. After his inauguration, he demanded that the EU increase its oil and gas imports from the US to avoid a tariff policy. “Either we do it with tariffs, or they have to buy our oil and gas” Trump said, according to Bloomberg.
The EU is growing concerned that Trump may return to a protectionist policy similar to his first term, when he imposed 25% tariffs on steel and 10% on aluminum from Europe. The EU responded by imposing 25% tariffs on US products like Harley-Davidson motorcycles, Levis jeans, and bourbon.
According to the Washington Post, Trump’s planned tariffs could cause significant harm to the EU’s already weakened economies. Economists warn that a renewed trade conflict could further strain the economic relationships between the transatlantic partners.
Trump is also showing a protectionist stance on other trade fronts, announcing a 10% tariff increase on Chinese goods and a 25% tariff on all products from Mexico and Canada, as well as demanding that all NATO members increase their defense spending to 5% of their GDP. He believes this is financially feasible for all members.
The UK, meanwhile, is pursuing its own strategies in dealing with the US. According to the Telegraph, UK Prime Minister Keir Starmer is seeking a special agreement with the new US administration that would exempt the UK from paying tariffs. However, there are also concerns in the UK. On January 16, UK Business and Trade Minister Jonathan Reynolds expressed concern about a possible trade war with the US in an interview with Sky News.
In contrast, UK Finance Minister Rachel Reeves expressed optimism, stating that the UK would continue to advocate for free trade and was convinced that the existing trade flows between the two countries would remain under Trump.