The European Union will use the 90-day pause in U.S. tariffs to find an alternative solution with U.S. President Donald Trump, according to the head of the Eurogroup.
Describing the hiatus as a “window of opportunity,” Paschal Donohoe, who leads the meetings of euro-area finance chiefs, said that Brussels will “see if we can identify a negotiated alternative to a path that will lead us all to a world of lower growth, higher inflation, to many risks to the progress that we’ve made in recent years.”
The U.S. president has claimed the EU was formed to “screw” the U.S. and has repeatedly highlighted that the bloc’s trade-in-goods surplus is evidence of an unfair relationship. The EU is the U.S.’s largest trading partner.
“I think that our best response would be to focus on the European economy itself, focus on bringing competitiveness back to Europe,” Finance Minister Andrzej Domanski told reporters at a meeting of EU finance ministers in Warsaw. “I believe we need a truly European answer I wouldn’t like to see a race to the bottom in terms of supporting industries.”
Similarly, Donohoe said that he remains “very, very confident that the economic foundations of the euro area are resilient and strong.”
The EU said on Thursday that it will delay the implementation of its counter tariffs against the U.S. over the 25 per cent duties Trump imposed on the bloc’s steel and aluminum exports last month. The move came just hours after Trump announced a 90-day pause before a 20 per cent “reciprocal” tariff rate was set to hit nearly all EU exports. That rate will now be 10 per cent.
If the EU doesn’t see from the U.S. “a willingness to move away from this kind of tariff policy, we know how to defend our economy, how to defend our companies, and will also come with countermeasures,” European Economy Commissioner Valdis Dombrovskis told reporters.
German Finance Minister Joerg Kukies and his Spanish counterpart Carlos Cuerpo also said they are ready to retaliate should the need arise.
“We have a fair amount of time to negotiate and the U.S. should be aware that countermeasures might follow if there is no solution,” Kukies said.
The EU may not limit itself to tariffs on goods but instead also target services and the operations of U.S. tech companies.
“For now our focus is on negotiation, on avoiding the worst,” Donohoe told Bloomberg television’s Oliver Crook in an interview. “What we want to do is find out, can we de-escalate this, find a new outcome, a better place than we are today, but then as we are doing that, we have to assess the trading relationships that we have elsewhere.”
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Jorge Valero, Kamil Kowalcze, and William Horobin, Bloomberg News
--With assistance from Jasmina Kuzmanovic, Agnieszka Barteczko, Jennifer Duggan and Max Ramsay.
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