The European Union (EU) “holds a lot of cards” in the escalating dispute over trade tariffs with the United States, European Commission president Ursula von der Leyen has said.
US president Donald Trump is expected to announce sweeping 20 per cent tariffs on trade imports coming from Europe and other parts of the world on Wednesday, which follow steep duties already put on steel, aluminium and foreign-made cars sold into the US.
The commission, which is the EU’s executive arm that sets the bloc’s trade policy, is preparing to hit back by putting retaliatory tariffs on US goods and products sold to the EU.
The Government has been lobbying the EU body behind the scenes, to try to avoid big exports from Ireland to the US, like whiskey and butter, being drawn further into the tariff fight.
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Speaking on Tuesday, Dr von der Leyen said many Europeans feel “utterly disheartened” by the announcements coming from the US administration.
Tariffs, which are effectively taxes on imports, would hike up the price of groceries and medication for average American people, as well as fuel inflation, she said.
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Wide-ranging tariffs on goods sold to the US would create “a bureaucratic monster of new customs procedures,” the commission president said.
The centre right German politician, who has headed up the EU executive since 2019, said exports to the US of pharmaceuticals, semiconductors and timber were all due to be hit by tariffs.
“American factories will pay more for components that are produced in Europe. This will cost jobs,” she said.
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“Europe did not start this confrontation. We think it is wrong. But my message to you today is also that we have everything we need to protect our people and our prosperity,” she told a sitting of the European Parliament.
As an open economy with huge trade flows to the US, Ireland is particularly exposed to the US and the EU both putting levies on imports from the other.
A large portion of that trade, Irish pharmaceutical exports to the US, are projected to drop by half over the next five years, in the event of a prolonged transatlantic trade war, Irish officials have estimated.
It is understood senior EU officials have not taken any measures off the table, in considering how to respond to the sweeping tariffs the Trump administration is expected to unveil this week.
The commission is finalising plans to slap tariffs on more than €20 billion worth of US products and goods, like soybeans, cosmetics, bourbon, motor boats and Harley Davidson motorbikes, in response to earlier US tariffs on steel and aluminium coming from the EU.
That package of tariffs will potentially be followed by another one, in an effort to bring the US to the negotiating table, one commission source said.
Ireland and other states like France have been lobbying the EU body to reconsider putting tariffs on imports of US bourbon, for fear exports of Irish whiskey and French wine and champagne will be hit in retaliation.
The Government has stressed the need for the EU to do what it can to avoid a cycle of tit-for-tat tariffs escalating into a full blown trade war.
Dr von der Leyen said the EU wanted a “negotiated solution” that would see both sides agree to suspend the proposed import taxes.
“I want to be very clear on the aim of our response. We think that this confrontation is in no one’s interest,” she said. “Europe has not started this confrontation. We do not necessarily want to retaliate, but we have a strong plan to retaliate if necessary,” she told MEPs.
