BRUXELLES — It’s one thing to go after Harley-Davidson motorcycles and bourbon. But when it comes to targeting Silicon Valley or Wall Street, the stakes are much higher. The European Union is contemplating a bold move as Donald Trump prepares to impose reciprocal tariffs on all U.S. trading partners on what he dubs “Liberation Day.” This marks the most significant escalation in the trade war initiated against Canada, Mexico, and China since his inauguration on January 20th.
“Liberation Day”: A New Chapter in Trade Wars
Since then, Trump has escalated with universal tariffs on steel, aluminum, and cars, prompting the European Commission to defend the economic interests of its 27 member states. Brussels has so far played by traditional trade rules by aligning tariffs with iconic American brands like Harley-Davidson in response to Trump’s metal tariffs.
With Washington threatening further punishment not only for existing tariffs but also for perceived non-tariff barriers like digital regulations, Brussels is gearing up to raise the stakes. President of the European Commission Ursula von der Leyen emphasized their strong position ahead of negotiations with statements hinting at potential measures against major U.S. banks like J.P. Morgan or tech players such as Google and Amazon.
Expert Insights:
Tobias Gehrke from the European Council on Foreign Relations notes that while America may have a big stick, Europe has many sharp stones to throw.
Strategic Responses and Potential Impacts
The EU is a net exporter of automobiles, pharmaceuticals, and food products to the U.S., giving it leverage in trade disputes despite an overall balanced transatlantic trade value. Analysts warn that targeting American tech giants, financial sectors, or pharmaceutical exports could lead Brussels down a path where retaliatory measures escalate tensions further.
In response to Trump’s broader tariffs on steel and aluminum imports in mid-March, Brussels is considering hitting $26 billion worth of American goods with retaliatory duties following consultations with EU governments and businesses.
While there are limitations on which goods can be targeted due to potential economic repercussions, possibilities include strengthening regulations governing big tech companies or imposing taxes on major U.S. banks operating in Europe.
More creative measures through intellectual property rights could also be utilized as part of the EU’s arsenal against escalating tensions.
Risks vs Diplomacy: Navigating Trade Strategies
As discussions intensify around potential actions targeting American services amidst rising tensions between two economic powerhouses,
expert opinions vary regarding how far Brussels should push against perceived threats from Washington without causing irreparable damage
to their intertwined economies.
Despite signaling readiness for escalation in trade strategies,
Brussels remains hopeful that negotiation avenues will prevail over conflict,
with hopes pinned on reaching common ground during upcoming talks
as both sides seek clarity amid looming uncertainties.
This article was originally published by POLITICO in English before being translated into French by Jean-Christophe Catalon.
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