The EU has upped the ante in the trade dispute with the US – warning duties on peanut butter and orange juice could be imposed if Washington goes ahead with tariffs on steel and aluminium.
European Commissioner Cecilia Malmstrom has warned a full-on transatlantic trade war is “not in anybody’s interests” – but confirmed the trading bloc will target a range of US exports if Donald Trump acts on his threat.
Last week, the President said he was preparing to add a 25% surcharge on steel and 10% on aluminium – with his economic adviser Gary Cohn quitting over the controversial plans.
Mr Trump has already responded to earlier European threats related to jeans, bourbon whiskey and Harley Davidson motorbikes by saying he would introduce steep tariffs on imported European cars.
In recent days, the President tweeted that trade wars “are good, and easy to win” but Ms Malmstrom warned reporters on Wednesday that a trade war “has no winners”.
Meanwhile, European Council President Donald Tusk told a news conference in Luxembourg: “The truth is quite the opposite: trade wars are bad and easy to lose.”
President Trump said: ‘trade wars are good and easy to win’. But the truth is trade wars are bad and easy to lose. EU’s goal is to keep world trade alive and if necessary to protect European by proportionate responses.
— Donald Tusk (@eucopresident) March 7, 2018
Ms Malmstrom said the Commission was taking legal advice to ensure any countermoves against the US tariff threat are within the bounds of the law.
It is also talking to leading steel producers in order to mitigate any effects from the fallout between the US and the EU.
Europe exports about €5bn (£4.47bn) worth of steel and €1bn (£890m) of aluminium each year to the US.
The European Commission estimates Mr Trump’s tariffs could cost €2.8bn (£2.5bn) and threaten thousands of jobs on the continent.
Markets have reacted nervously since last week’s initial threat on tariffs by Mr Trump, though this has been partly mitigated by scepticism about whether the President was prepared to follow through on his rhetoric.
Some analysts think Mr Cohn’s departure signals that the threat was more likely to be genuine.
Major trading partners of the US attending a World Trade Organisation (WTO) meeting expressed fears about the dispute escalating into a tit-for-tat trade war.
A Canadian official said the US may be opening a “pandora’s box”, a WTO spokesman said after the behind-closed-doors meeting.