EU "studying" measures against Trump - What is the bloc planning in response to potential tariffs?
The European Union is studying ways to respond to potential tariffs from the Trump administration. The 27 countries want to find some form of agreement with Washington, but in the meantime the EU says it is ready to respond decisively in the event of trade tariffs. Various hypotheses are being studied, which still need to be evaluated concretely.
sERVICE
A diplomat in Brussels explained that one possibility would be to hit services, that is, the area in which the European Union has a trade deficit with its American partner. While in the goods sector, the United States suffered a heavy trade deficit with Europe in 2023, worth 155.8 billion euros, in the services sector Washington recorded a surplus of 104 billion euros.
On the services front, one of the hypotheses would be to use the anti-coercion regulation that entered into force in 2023. The instrument allows the European Union to retaliate against a country that takes punitive measures against a member state. At the time, the regulation was developed after China had decided to punish Lithuania over Vilnius' relations with Taiwan.
The Big Tech Strike
Among other things, the legislative text could allow Brussels to crack down on large digital companies, revoking intellectual property rights protection or suspending the commercial exploitation of their online offerings. According to information gathered in Brussels, the European Commission is instead considering the possibility of using another regulation, which entered into force in 2021.
The difficulties of appealing to the WTO
This second legal instrument was born in the wake of the difficulties in accessing the World Trade Organization, due to the US boycott of the Geneva-based body. The regulation allows the European Union to introduce economic countermeasures such as customs tariffs, quantitative restrictions and measures in the field of public procurement whenever a trading partner adopts measures considered illegal, while blocking the appeal process at the WTO.
Regardless of the means to be used, there is a particular fear spreading among the twenty-seven member states: American economic decisions that could divide Europeans. Trade policy is a community policy. If Washington were to opt for targeted tariffs against only a few countries, instead of general tariffs on all countries, it would highlight the different interests between governments and make the European response even more complicated.
In 2018, during the first Trump administration, the European Union decided to target American goods, including Harley Davidson motorcycles and Levi's jeans, in response to American tariffs on steel and aluminum. The European retaliation was then temporarily suspended. That suspension will end at the end of March.
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