Transatlantic trade war would hurt both sides, EU leaders warn
EU prepared with responses, aims to avoid escalating tensions
4 February 2025
3 minute read
By: European leaders warned on Monday that US President Donald Trump's threat to expand tariffs to the EU risked igniting a trade war that would harm consumers on both sides of the Atlantic, reported Reuters.
European Union foreign policy chief Kaja Kallas said if the US and Europe started a trade war "then the one laughing on the side is China".
European Commission head Ursula von der Leyen said the EU was aware of "potential challenges" in US trade relations - a euphemism for new tariffs - but was ready for them.
"When targeted unfairly or arbitrarily, the European Union will respond firmly," von der Leyen said following an informal gathering of EU leaders in Brussels.
She said EU leaders wanted to be pragmatic, engage early, discuss and negotiate with Washington if necessary. They knew the European economy had to become more competitive to have the necessary strength to handle any trade tensions, she said.
"The debate today in the room was about the principle, first of all, be prepared. And I can only say we are prepared," she told a news conference.
EU diplomats said the 27-nation bloc had a range of possible responses to any US action, but wanted to see what Trump's next move was before finalising anything and the aim for now was to avoid pouring fuel on the fire.
Trump said on Sunday the EU was next in line following his decision to impose sweeping tariffs on Mexico, Canada and China, but on Monday he paused the new tariffs on Mexico and Canada for one month. A senior European diplomat said it was hard to plan when dealing with someone "who is totally unpredictable".
"It will definitely happen with the European Union. I can tell you that because they've really taken advantage of us," Trump told reporters on Sunday, reiterating complaints about a trade deficit in goods with the EU.
"They don't take our cars, they don't take our farm products. They take almost nothing and we take everything from them."
US consumers to suffer
Germany's conservative opposition leader Friedrich Merz, who is widely seen as the next German Chancellor after Feb 23 elections, said late on Sunday that tariffs risked backfiring.
"Trump will now also realize that the tariffs he is imposing will not have to be paid by those who import into America. They will have to be paid for by consumers in America," he said.
French central bank governor Francois Villeroy de Galhau said Trump's tariffs were "very brutal" and would hit the autos sector especially. "Everybody loses in this kind of protectionist trade war," he told France Info radio.
Shares in European carmakers fell on Monday on concerns about the impact of tariffs. In his complaints about the trade balance with the EU, Trump has focused on goods trade alone.
The EU has consistently exported more goods to the United States than it has imported and the US goods trade deficit stood at 155.8 billion euros ($159.5 billion) in 2023, according to Eurostat data.
However, in services, the US has a surplus of exports over imports with the European Union of 104 billion euros in 2023, according to Eurostat.
($1 = 0.9766 euros)
