EU is ready to retaliate as Trump auto-tariff deadline nears

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MADRID/BERLIN (May 13): The European Union is finalizing a list of American goods to target with retaliatory tariffs in the event that U.S. President Donald Trump, who is expected to make a decision by May 18, imposes levies on car imports.

“We are already preparing a list of possible items that would be on that list,” EU trade chief Cecilia Malmstrom said in a Bloomberg Television interview on Monday. “The moment this is official — if this happens, I still hope it won’t — then we would publish that list,” she said, adding that it would “happen quite rapidly.’

The U.S. and the EU reached a political accord in July to work toward a limited trade agreement, which would put on hold the threat of tariffs on EU cars. Those duties would be based on the same national-security grounds invoked for controversial American levies on foreign steel and aluminum. The EU will hit 20 billion euros (US$22.5 billion) of U.S. goods if Trump follows through on the auto threat.

U.S. tariffs on European cars and auto parts would mark a significant escalation of transatlantic tensions, because the value of EU automotive exports to the American market is about 10 times greater than that of the bloc’s steel and aluminum exports combined. As a result, European retaliatory duties would target a bigger amount of U.S. exports to Europe.

A 25% U.S. levy on foreign cars would add 10,000 euros to the sticker price of European vehicles imported into the country, according to the European Commission.

“It’s a little bit unpredictable for the moment,” Malmstrom said, adding that as part of the July agreement the two regions wouldn’t impose new tariffs on each other. “We hope the president will still stick to those words.”

‘Law of the Jungle’

Speaking later at a trade conference organized by German Chancellor Angela Merkel’s parliamentary caucus, Malmstrom said she sees the U.S. resorting to a “law of the jungle” approach to trade, following the country’s retreat from the global stage. But there’s still potential that the two sides can quickly come to terms on a limited accord focusing on industrial goods.

“If we decide to negotiate such an agreement, we can do it very quickly and it would bring mutual benefits for all of us,” said Malmstrom. “It would expand growth and save a lot of money on tariffs. That could then create trust for something bigger in the future.”