EU bracing for trade war with Trump – Politico

The EU is bracing for a massive trade war with Donald Trump if he wins the US presidential race in November and erects new barriers to commerce, Politico reported on Monday, citing senior diplomats and bloc officials.

Concerns are mounting in EU capitals since the former US president has pledged to target the bloc with a slew of new punitive trade measures in a bid to address what he says are serious imbalances in imports and exports, the outlet said.

Washington and Brussels have been at odds over the issue since Trump imposed 25% tariffs on imports of European steel and 10% on aluminum in 2018 in his first term as president, arguing EU competition was endangering US national security.

The EU retaliated, imposing duties on companies including motorcycles produced by Harley-Davidson Inc. and Levi Strauss & Co jeans. Trump went even further however, and threatened to impose tariffs on EU car exports. Although the threatened duties never took effect, Brussels “was shocked” by Trump’s willingness to overhaul supply chains.

“Last time we didn’t believe how far Trump would actually go,” one of the diplomats told Politico. “This time we’ve had time to prepare. Europe has changed a lot, and we will be ready to act.”

Trump has previously said that as president, he may also introduce counter-measures against EU digital services taxes that implicitly target US technology leaders.

“Our allies have taken advantage of us. More so than our enemies,” Trump said last week in an interview with Bloomberg News Editor-in-Chief John Micklethwait. “Our allies are the European Union. We have a trade deficit of $300 billion with the European Union.”

The EU is preparing a coordinated impact assessment of a potential Trump victory with the European Commission overseeing the process, and is determined to retaliate and “hit back hard,” one diplomat told Politico. According a second diplomat, the bloc is confident it can “win this trade war.”

The EU should aggressively retaliate given that Trump uses trade and tariffs as a negotiating tactic to force countries to act in the interest of the US, the report said.

At his rallies, Trump has vowed to impose a 10% baseline duty on imports from other countries. “To me, the most beautiful word in the dictionary is ‘tariffs’,” he said. “It’s my favorite word.”

He also took aim at German car producers last week, pledging to slap high levies on imported cars. According to Trump, such duties targeting EU industry would force producers in the bloc to move their factories to the US, boosting its long-term global manufacturing position.