Brussels unveils Trump trade retaliation tactics to EU countries

The European Commission presented to EU countries on Wednesday a list of the concessions it is willing to make to the Donald Trump administration as well as a new list of goods it is going to slap with tariffs if negotiations fail, an EU official and an EU diplomat told POLITICO. 

The dual-track approach allows the European Commission, which calls the shots on trade policy on behalf of the EU’s 27 member states, to get sufficient political backing, and enter into negotiations with Washington from a position of strength. By threatening extra retaliation in addition to measures that are currently suspended, it also adds pressure on Washington to get real on its professed willingness to negotiate with Brussels. 

Potential offers to the U.S. listed in the so-called “term sheet” negotiated by the European Commission include boosting investments in energy. Some of the EU’s own regulations could also be eased. 

As before, lowering duties on imported cars and the zero-for-zero mutual offer on industrial goods have not been taken off the table. Cooperating on China’s trade barriers and overproduction is another area where Brussels sees space for cooperation with Washington.  

However, EU diplomats caution that any offer will be tightly constrained by internal divisions among member countries, some of whom are reluctant to be seen as yielding to U.S. pressure and others careful not to alienate one of the EU’s historical allies. 

The briefing of European ambassadors was held in a restricted setting by Commission President Ursula von der Leyen’s most senior aide, Björn Seibert, and the Commission’s top trade official, Sabine Weyand, two EU diplomats said. The meeting is a crucial step for the Commission to keep the EU’s 27 countries on board while it navigates the 90 day pause that Trump announced on some U.S. tariffs. The EU’s response is also suspended, provisionally, until July 14. 

The European Commission declined to comment on the measures.

Pushing for more 

Alongside the offers, the bloc is still working on a response to the 25 percent tariffs on cars and the 10 percent tariff still applied to EU goods. 

Despite prior expectation that Brussels would hit Washington in the domain of services, such as Big Tech or Wall Street, the Commission chose to stick with a more classic retaliation on goods in a bid not to escalate trade tensions with the Trump administration. 

This might not be to the taste of all EU countries, with countries such as France and Belgium pushing the European Commission to use all the tools the bloc has at its disposal. 

France has been one of the most outspoken countries on the need to respond robustly to U.S. tariffs, while it has also lobbied to spare its already hard-hit cognac producers.

“The counter-measures must be applied to the entire spectrum, not just goods, but should also include all the instruments we have,” an Elysée official said. French President Emmanuel Macron himself last month said that the EU should consider using the EU's so-called bazooka, the anti-coercion instrument. 

Macron and von der Leyen are expected to discuss tariffs on Monday in Paris, on the sidelines of an event on science and research. 

The Financial Times first reported on the new list of tariffs on goods.