EU Prepared for Retaliatory Tariffs on Spirits and Planes, EU Commission Official Says
The EU is prepared to impose retaliatory tariffs on U.S. aircraft and bourbon to avoid "just being a market for U.S. products," an EU trade official said on May 15.
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Despite the fact that the EU has tried to maintain a zero-for-zero tariff agreement with the U.S., "they have proceeded to impose 10% on the exports of EU spirits," which means the EU must "consider imposing tariffs in this area, too," Matthias Jorgensen, the head of the EU's U.S. Trade Unit, said at a meeting of the European Parliament's Committee on International Trade. The EU may have to "rebalance in order to protect EU trade interests and our industry" in response to the U.S.'s potential tariffs from its Section 232 investigation on aircraft as well, he said. The entire situation is "regrettable," he said.
The EU is being realistic that it will likely not be able to convince the U.S. to fully get rid of tariffs on EU products, he said, which will necessitate the imposition of retaliatory tariffs. He didn't leave any room for ambiguity as to the EU's response: "We might have to see how we rebalance on our side. We will do that."
Despite promising retaliation for any U.S. tariffs, he assured members of the parliament that the EU wouldn't participate in a race to the bottom: "We do not intend to proceed to the kind of closing, unilateral closing, that the U.S. has been doing." The EU is not in a hurry to "repeat the mistakes done in the 1930s" when the U.S. passed the Smoot-Hawley Tariff Act that caused a global increase in tariff rates.
Jorgensen also drew a red line about EU willingness to negotiate what the U.S. has called "non-trade" barriers: "We do not accept that changes to EU legislation should be on the table." The EU needs to be able to have "regulatory autonomy" and the "full capacity" to implement rules, he said. Still, he said, it is possible to "listen to the U.S." on these matters and "we can make advances there."
Indeed, the EU remains optimistic about trade negotiations with the U.S.; he said that "we have an enormous possibility to improve trade and investment across the Atlantic." He said that the EU is "ready for a zero-for-zero approach across all industrial goods, for example." He also said that there is dialogue "at the level of the Commission" with respect to "key industries" like the car, pharmaceutical and semiconductor industries. He said that the European Commission thinks that "there is possibility to work with the U.S." on these issues.
Jorgensen was very frank in his response to a colleague about the possibility of the U.S. judiciary declaring President Donald Trump's tariff action illegal: "I think we don't put our trust in them." Instead, he said, "we will put our faith in our capacity to negotiate with the U.S. ... That's the road that we will go down."