European leaders warned on Monday that U.S. President Donald Trump’s threat to expand tariffs to the EU risked setting off a trade war that would cause economic harm on both sides of the Atlantic.
European Union foreign policy chief Kaja Kallas said if the U.S. and Europe started a trade war, “then the one laughing on the side is China.”
“We are very interlinked. We need America, and America needs us as well,” she said, speaking ahead of an informal gathering of EU leaders in Brussels.
EU diplomats say the 27-nation bloc is preparing possible responses, but needs to see what Trump’s next move is before finalizing anything. They said the aim for now is to avoid pouring fuel on the fire.
Trump told the 27 nations of the European Union that they were next in line, following his decision to impose sweeping tariffs on Mexico, Canada and China.
“It will definitely happen with the European Union. I can tell you that because they’ve really taken advantage of us,” Trump told reporters on Sunday, reiterating complaints about a trade deficit.
“They don’t take our cars, they don’t take our farm products. They take almost nothing and we take everything from them.”
The federal government announced retaliatory 25 per cent tariffs on U.S. goods — ranging from juice to appliances and cars — after President Donald Trump followed through on his tariff threats. The trade war has people being urged to buy Canadian as the scope of the economic fallout waits to be seen.
German Chancellor Olaf Scholz struck a more cautious tone, urging the EU and the U.S. to work together.
“It’s clear that as a strong economic area, we can shape our own future and react to tariff policies … But the perspective and the goal should be that things result in co-operation,” he said.
Concerns about European auto sector
Germany’s conservative opposition leader Friedrich Merz, who could become chancellor after elections are held on Feb. 23, said late on Sunday that tariffs risked backfiring.
“Trump will now also realize that the tariffs he is imposing will not have to be paid by those who import into America. Instead, they will have to be paid for by consumers in America,” said Merz.
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French central bank governor Francois Villeroy de Galhau said Trump’s tariffs were “very brutal” and would hit the auto sector especially.
“Everybody loses in this kind of protectionist trade war,” he told France Info radio.
Shares in European carmakers fell on Monday on concerns about the impact of tariffs.
In his complaints about the trade balance with the EU, Trump has focused on goods trade alone.
The EU has consistently exported more goods to the United States than it has imported, and the U.S. goods trade deficit stood at 155.8 billion euros ($159.5 billion US) in 2023, according to Eurostat data.
However, in services, the U.S. has a surplus of exports over imports with the European Union of 104 billion euros ($106.7 billion US) in 2023, according to Eurostat.
Milder talk about Britain
Trump said on Sunday that although Britain was “out of line” when it came to trade, he thought it may be able to avoid tariffs, adding of the imbalance: “I think that one can be worked out.”
British Prime Minister Keir Starmer told reporters at the weekend: “It’s early days and what I want to see is strong trading relations, and in the discussions that I’ve had with President Trump, that’s what we have centred on.”
The United States is Britain’s biggest trading partner as a single country, although the European Union is bigger as a bloc. Less than one-third of Britain’s trade with the U.S. is in goods, which could face tariffs, with the rest made up of services.
Starmer was also in Brussels, hoping to improve ties with the EU after the Brexit split that resulted from a 2016 referendum, with his Labour government hoping to agree to scrap some red tape hampering trade with European allies.
