Reuters reports that the European Union is preparing to respond to the "tariff storm" initiated by US President Trump by targeting US imports valued at US$28 billion (about HK$218.4 billion), ranging from dental floss to diamonds. This move indicates that the EU will follow in the footsteps of China and Canada in implementing retaliatory tariffs against the US. If the EU proceeds with this retaliation, it could escalate the global trade war and heighten the risk of a global economic downturn.
The report states that the European Commission, responsible for coordinating EU trade policy, plans to present a list of US products subject to additional tariffs to member states on Monday (April 7). This response is intended to address the steel and aluminium tariffs imposed by Trump, rather than a broader set of reciprocal tariffs. The targeted products include US meats, grains, wine, wood, clothing, chewing gum, dental floss, vacuum cleaners, and toilet paper.
The EU is already facing a 25% tariff on steel, aluminium, and automobiles imposed by the US last Wednesday (April 2). Trump announced plans to impose a 20% reciprocal tariff on nearly all other goods from the EU starting this Wednesday (April 9). Last year, the total value of EU exports to the US reached €532 billion, with Trump's tariffs covering about 70% of EU exports to the US, and potentially expanding to include copper, pharmaceuticals, semiconductors, and wood.
Considering emergency measures to prevent influx of Chinese goods
Additionally, the Financial Times reports that following the US imposition of a 34% tariff on China, there may be a surge of cheap Chinese goods being redirected to regions outside the US, with Europe likely being the first to feel the impact. To address this, EU officials are considering emergency measures to prevent a direct influx of Chinese "cheap goods" or those rerouted through other Asian countries to Europe.
The report cites economist Andrzej Szczepaniak from Nomura Securities, who believes that the new US tariffs on China far exceed market expectations, significantly increasing the risk of Chinese goods being dumped in Europe. A senior EU official stated that the EU is preparing new emergency tariffs to address this situation and has enhanced monitoring of import flows, allowing for market closure in response to sudden surges. Previously, the EU implemented similar measures in the steel industry and is now considering whether to do the same in other sectors.
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