EU Threatens Retaliation Over Unacceptable U.S. Tariff Move

By Philip Blenkinsop and David Lawder

BRUSSELS/WASHINGTON () – The European Union claimed the United States is opposing attempts to reach a trade agreement and cautioned on Monday that retaliatory actions could follow if an accord isn’t reached to prevent the “completely intolerable” taxes President Donald Trump has vowed to implement starting August 1.

On Saturday, Trump escalated his trade conflict, announcing plans to implement a 30% tax on majority of goods coming from the European Union and Mexico starting next month, joining previous threats directed at other nations such as major Asian economies like Japan and South Korea.

The European Union has thus far refrained from taking retaliatory actions to prevent a worsening cycle of mutual retaliation in the trade conflict as long as there is still potential for achieving a better result through negotiations.

However, European Union ministers who left a gathering in Brussels on Monday seemed more inclined to retaliate.

At a press briefing after the gathering, Danish Foreign Minister Lars Lokke Rasmussen described the tariff warning as "completely intolerable."

European Union Trade Commissioner Maros Sefcovic, during the same press event, stated that he felt there was still an opportunity to keep discussions going, although he expressed disappointment over Washington's inability to reach an agreement with its main trade partner.

"the eu... always makes a sincere attempt, particularly when taking into account the significant efforts made, how near we have come to reaching an agreement, and the obvious advantages of the settlement that has been discussed," he stated.

"However, as I mentioned earlier, it requires two hands to clap," he stated, noting that European Union member countries have concurred that the 27-member block must implement retaliatory actions if the trade discussions with the U.S. do not succeed.

Italian Foreign Minister Antonio Tajani previously stated that the European Union has already created a list of tariffs valued at 21 billion euros ($24.5 billion) targeting American products in case an agreement between the two parties isn't reached.

Meanwhile, White House economic advisor Kevin Hassett stated that discussions regarding trade continue with the European Union, Canada, and Mexico. Canada will be subject to a 35% tariff starting next month.

When asked about his hopes for discussions with the European Union, the head of the White House National Economic Council responded: "We'll find out... we have several weeks remaining."

Hassett mentioned on Sunday that President Trump hoped for improved agreements if the new tariffs were to be prevented.

GERMAN CONCERN

The pending responsibilities have raised concerns across Europe, particularly in Germany, the European Union's largest economic power.

Following Chancellor Friedrich Merz's statement on Sunday that a 30% tax would "severely impact the German exporting sector," the leader of the German Association of Chambers of Commerce and Industry urged immediate steps to be taken.

Germany's businesses face significant risks due to the growing tariff dispute with the United States," stated Volker Treier on Monday. "Intense discussions must take place to prevent the breakdown of trade between North America and Europe.

Meanwhile, European businesses are bracing themselves for the worst-case scenario.

The producers of Italy's famous Chianti wine from Tuscany, for instance, have called for an updated exporting plan supported by the EU, focusing on new regions like South America, Asia, and Africa.

After coming back to the White House at the start of this year, Trump has aimed to employ various tariffs to strengthen the U.S. economy, encourage businesses to invest within America, and rejuvenate industries such as manufacturing.

The first "Liberation Day" tariff declaration he made in April, establishing a base rate of 10% on all imported goods with increased taxes on specific items or nations, sparked concerns about worldwide supply chain issues, causing significant market turbulence.

However, later reversals and postponements, such as a 90-day break on many tariffs intended to provide space for trade agreement discussions, have made investors mostly accustomed to Trump's unpredictable policy changes.

European shares declined on Monday, with U.S. futures indicating a weaker start for Wall Street following the most recent developments. European automotive and beverage companies experienced significant losses.

SCRAMBLE FOR DEALS

The approaching August 1 deadline has prompted urgent efforts from governments globally to finalize trade deals.

The head of South Korea's major trade representative stated on Monday that reaching an agreement in principle before the deadline could be feasible, with indications that Seoul might consider granting the U.S. increased entry into its agricultural sector, according to domestic news outlets.

Trade Minister Yeo Han-Koo, who recently engaged in top-tier discussions with American authorities, stated that South Korea aims to prevent "unjust" U.S. taxes on crucial industries vital to its manufacturing strength, which could jeopardize collaboration with its primary military ally and commercial partner, according to news outlets.

"It may be feasible to achieve a general agreement during the U.S. tariff discussions, followed by additional time for more detailed talks," reported the Newsis news agency, quoting Yeo speaking to local media journalists.

He also mentioned, 'Twenty days aren’t sufficient to develop a flawless agreement that includes all specifics.'

South Korea is working quickly to finalize a trade agreement in an effort to prevent a 25% tax from being imposed on its goods, similar to what Japan currently experiences.

(Assisting reports from Charlotte Van Campenhout, Hyunjoo Jin, Milan Strahm, Cristina Carlevaro, David Lawder, John Revill, Andreas Rinke, Wayne Cole, and Emma Rumney; written by Keith Weir; edited by Joe Bavier)