MNI: EU To Talk With US, Boost Industry Protection-Officials
MNI (BRUSSELS) - Internal splits within the European Union mean it is likely to seek to deescalate any trade dispute with the U.S. via negotiation, but it may also look to increase non-tariff barriers to protect strategic industries such as steel, cars and chemicals, according to sources close to the bloc’s thinking and EU documents.
While the EU would impose calibrated, tit-for-tat measures to U.S. tariffs, some big member states, including Germany and Italy, remain unwilling to risk provoking President Donald Trump, though others, led by France, might prefer the Commission to be more forceful.
“The member states are quite split. I don’t think the Germans or Italians would be very fond of a trade war. For Germany particularly, it’s tantamount to suicide in the current situation. Their industry is already in very bad shape. If a trade war ensues, I don’t see how what is left of German industry survives,” one source close to discussions told MNI.
These divisions mean it is likely to emphasise negotiation, sources said. The EU is likely to take heart from the pause in U.S. tariff implementation on Canada and Mexico after Trump spoke to their leaders, one said. Trump has criticised the EU for not importing enough U.S. products, and for not spending enough on defence.
"I think the Mexico and Canada way would suit the EU. But I wouldn't exclude that the EU at least signals some countermeasures. It's also looking like Trump prefers deals to tariffs, which has to be encouraging."
INDUSTRIAL PROTECTION
The U.S. tariff threat has further driven home the need for the EU to protect its industrial base, with documents drafted for the meeting of the bloc’s trade ministers in Warsaw on Tuesday stressing that the advent of Trump has made the competitiveness challenge more urgent than ever. Heavy industries also face state-subsidised competition from China and global overcapacity. (See MNI: EU Ministers Want Private Funds To Boost Competitiveness)
Additional “emergency and strategic” measures could include new, more tailored and targeted trade defence tools to add to those already announced in recent years – such as those dealing with economic coercion by powerful state actors, like China, foreign export subsidies and foreign investments in sensitive and strategic sectors, one document said.
“The possible introduction of stronger trade defence measures should go hand in hand with even more active use of the instruments already in place,” it said, cautioning that any action must be “proportionate” and “taken only to ensure a level playing field.”
European Trade Commissioner Maros Sefcovic said on Tuesday that the EU hopes to engage with the U.S. immediately, but is waiting for the US Congress to conclude confirmation hearings with his key counterparts.