Brussels vowed to respond to Donald Trump’s new tariffs with measures of its own instead of returning to the negotiating table, as transatlantic trade tensions escalated on Friday.
Cecilia Malmstrom, European trade commissioner, said the EU “had closed the door” on talks to partially liberalise parts of EU-US trade after the tariff exemption ran out.
“We are not going to enter into any negotiations,” Ms Malmstrom told a press conference. “We offered dialogue and future negotiations under the condition they took away this threat. They didn’t and here we are”, she said.
She added: “When they say American first, we say Europe united”.
Ms Malmstrom’s declarations follow a personal rebuke to Mr Trump from French president Emmanuel Macron who said the new US tariffs were “illegal” and a “mistake” as leaders from Canada and Mexico also prepared retaliatory duties.
But alongside the international condemnation of Mr Trump’s move, there were also urgent calls from German trade groups for restraint, amid fears that German industry would be one of the biggest casualties of a transatlantic trade war. Such concerns contrast with Mr Macron’s hard line.
In a telephone conversation with Mr Trump on Thursday night, the French president said the levies on the imports from Washington’s longtime allies were tantamount to “economic nationalism that will penalise everyone including the US”, an Elysée Palace aide said.
Mr Macron warned Mr Trump that the EU would “react by taking appropriate measures, in a firm manner and proportionately, in conformity with World Trade Organization rules”, the aide added.
US allies have reacted angrily on both sides of the Atlantic, with some European and Canadian leaders delivering emotional condemnations that touched on their shared sacrifice in wars alongside the US.
Brussels has announced it will enact retaliatory tariffs on US exports and bring a case to the WTO. In the coming weeks the EU will select the US products it will target from a list it has submitted to the trade body, including cigarettes, Harley-Davidson motorcycles, sweetcorn, peanut butter and whiskey.
Canada said it would impose tariffs on up to $12.8bn worth of US imports. Justin Trudeau, the Canadian prime minister, on Thursday emphasised his country’s close ties with the US as he hit back at Washington’s actions.
“Canadians have served alongside Americans in two world wars and in Korea. From the beaches of Normandy to the mountains of Afghanistan, we have fought and died together,” Mr Trudeau said. “That Canada could be considered a national security threat to the United States is inconceivable. “
Mexico is considering targeting US agricultural products.
Financial markets have shrugged off the prospect of a trade war between some of the world’s largest developed economies, with European shares staging a relief rally on Friday morning after a week of jitters over political instability in Italy.
Europe’s Stoxx 600 index was up 0.9 per cent in midday trading with Italy’s main FTSE MIB index rallying 2.7 per cent as the country’s week-long political stand-off was resolved with a new governing coalition agreed by two populist parties.
In his call to Mr Trump, Mr Macron reiterated his willingness to support joint efforts to reform the international trade system, “notably to reduce overcapacities, regulate subsidies and better protect intellectual property”.
In a sign that elements of the US-EU trade relationship are still functional, the European Commission also announced it was launching a case against China over Beijing’s practice of forcing foreign investors to transfer technology as a cost of entry to doing business in the country. The complaint is also at the centre of the Trump administration’s tariff threats against Beijing.
But Mr Macron’s blunt comments highlight the damage done to an already strained relationship after the White House decision on Thursday to levy 25 per cent tariffs on steel and 10 per cent on aluminium from the EU, Canada and Mexico, which had been given a temporary reprieve since March.
The tensions will test the strength of the EU’s vow to refuse to engage in trade negotiations with the US while it is subject to tariffs.
The threat of escalation may tempt some EU members, notably Germany, a big net exporter, to reconsider the strategy — placing it at loggerheads with France’s tougher line.
Mr Trump had warned before Thursday’s decision that any EU countermeasures would be met with more duties. The US administration in May said it would investigate whether car imports posed a national security risk and Berlin fears its automotive industry could be the next target. Tariffs on the car industry would pose a much larger threat to the EU, with the US importing $20.2bn worth of cars from Germany and $8.6bn from the UK last year.
On Friday, Volkswagen, which has a huge influence on German politics and corporate strategy, said it would welcome a resumption of talks “on a bilateral transatlantic agreement between the EU and US aimed at removing existing mutual barriers to trade”.
Ulrich Ackermann, of VDMA, one of the main German industrial associations, said there should be negotiations on a new free-trade treaty. “This should cover not only tariffs, but also rules of origin and technical barriers to trade,” he said.
“We believe the US and EU are natural partners and we don’t need any tariffs, they should all be set at zero. We should be trying to create one big single market.”
Other German industrial groups made similar arguments, urging restraint. “Reactions of the EU which lead to an escalation of the situation and more trade barriers would cause much more damage,” said Christian Vietmeyer, head of the Steel and Metal Processors’ Association, which mainly supplies the car, electronics and machine-building industries. “The EU should stay calm.”
Get alerts on Trade disputes when a new story is published