European Commission President Ursula von der Leyen stated the EU would "respond firmly" if the US unfairly targets it with tariffs. This follows President Trump's announcement of planned tariffs on steel and aluminum imports, aiming for rates matching those of other countries.
The EU and US have a significant trade relationship, with €1.5 trillion ($1.55 trillion) in goods and services exchanged in 2023. In 2018, when Trump imposed tariffs on €6.4 billion of EU steel and aluminum, the EU retaliated with duties on €2.8 billion of US products. Further tariffs were suspended after Joe Biden became president.
The EU's previous strategy targeted US steel and aluminum, as well as products from states that supported Trump, such as Kentucky bourbon and Harley Davidson motorcycles. A similar "rebalancing" approach is possible, though the US has more goods to target. In 2023, US goods imports into the EU totaled €347 billion, while exports were €503 billion, according to Eurostat.
The EU's Anti-Coercion Instrument (ACI), effective since late 2023, allows retaliation against countries economically pressuring EU members. This includes limiting access to public procurement, services trade, and investment. While the US has a goods trade deficit with the EU, it has a surplus in services, including digital services.
The EU can also restrict intellectual property rights, financial service access, and the placement of chemicals and agri-food products. The ACI was created in response to concerns that the Trump administration and China used trade as a political tool, such as China's actions against Lithuania after it allowed Taiwan to establish a de facto embassy.
Beyond trade policy, the EU is investigating US tech firms like Apple, Alphabet, X, and Meta under the Digital Markets Act (DMA) and Digital Services Act (DSA). Fines under the DMA can reach 10% of global turnover, or 20% for repeat offenses. The DSA carries a maximum fine of 6% of turnover.
The EU also considered a Digital Services Tax, but suspended it to pursue a broader OECD solution. Some EU countries, like France, have digital services taxes. Trump previously responded with tariffs, which Biden suspended.
Separately, President Trump stated he plans to impose US tariffs on other countries that would match the tax rates charged by those nations, emphasizing a "reciprocal" approach. He also ended previous exemptions to tariffs on steel and aluminum, raising the tariff rates on aluminum. He mentioned potentially imposing additional taxes on imported autos, computer chips, and pharmaceutical drugs.
After taking office on January 20, Donald Trump levied a 10 per cent tariff on all Chinese imports due to China's involvement in the global fentanyl supply network.
Trump had also announced a 25 per cent tariff on imports from Mexico and Canada, which were suspended for 30 days and will likely be enforced from March 1.