‘TARIFFS all the way!!!’: EU prepares carrot and stick policy for Donald Trump presidency
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EU can negate Trump’s threats by buying more US goods, oil and gas or impose its own tariffs in retaliation. If there is one thing the EU knows about Donald Trump, it is that he loves tariffs. The incoming president has said “tariff” is “the most beautiful word in the dictionary” and has threatened to impose them on US allies around the world.
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On the campaign trail he proposed tariffs of 10-20% on imports from all countries, with a 60% rate reserved for China. Once elected, Trump tweeted that the EU must buy more US oil and gas “otherwise it is TARIFFS all the way!!!” This week, he announced he would create an “external revenue service” on the day of his inauguration.
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The European Commission, which leads on trade policy for the EU’s 27 member states, has been preparing for the next US president since last summer. Details of its response to potential tariffs remain closely guarded and dependent on what the volatile incoming president actually does.
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It is understood that the commission has a twofold, carrot and stick approach. The sticks are the EU’s own retaliatory tariffs; the carrots include offers to buy more US goods. Before Trump’s social media outburst, the European Commission president, Ursula von der Leyen, proposed that the EU could buy more liquefied natural gas from the US to replace the LNG it buys from Russia.
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However well-prepared the EU is, officials are concerned about a possible trade war. The EU and US traded a record €1.54tn in goods and services in 2023. Commission officials describe that trade as “balanced”, pointing out that the EU buys more services from the US than it sells in return. But Trump tends to focus on trade in goods, where the US runs a deficit. “They [the EU] don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price,” he complained on the campaign trail last October.
