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An eye for an eye

That, in essence, is the playbook the European Union (EU) should follow in responding to US President Donald Trump’s tariff war, according to Belgium’s new Foreign and European Affairs Minister Maxime Prévot.

Belgian Foreign and European Affairs Minister Maxime Prévot. (Photo: Getty)

The American leader's derogatory remarks about the EU along with subsequent US measures “must lead us to react with similar vigor,” Prévot told Politico. The bloc must demonstrate that its market of 450 million people “deserves to be treated differently” than Trump has done so far, he said.

In responding to Trump, the EU should not take anything off the table, including hitting Washington where it hurts, Prévot said.

“We know that, among the sectors likely to bring the greatest sensitivity and responsiveness [from the US], there is the whole digital component. And so personally, I am more in favor of also using this lever as part of the battery of counter-fire measures,” he said.

The bloc’s tech regulation has been caught up in the transatlantic tariff war, with Trump threatening to retaliate against the European Commission’s enforcement of EU tech rules on content moderation and digital competition.

Social media platform X, owned by Trump’s high-level adviser Elon Musk, is facing a first-ever penalty after it was deemed in a preliminary finding last summer to be in breach of EU social media rules.

Triggering the EU’s never-used anti-coercion instrument should also be an option, Prévot said. The tool, designed in the wake of Trump’s first term, allows for broad retaliation in response to trade discrimination, such as quotas and tariffs or restrictions on foreign investment.

His remarks come as cracks have started to appear in the bloc’s unity in how to respond to Trump’s erratic tariff threats. Faced with early criticism from France, Germany, Ireland and Italy, the European Commission was forced to broaden its consultations with EU capitals in the lead-up to imposing tariffs on €18 billion of US exports, a move that ratcheted up trade tensions with Washington.

A high-stakes gamble

“This war, particularly on tariffs, is like a boomerang being thrown,” he said. Those using tariffs are “forgetting that [the boomerang] is coming back.”

The European Commission had previously declared that it would "react firmly and immediately against unjustified barriers to free and fair trade".

The European Commission had previously declared that it would "react firmly and immediately against unjustified barriers to free and fair trade" after President Trump announced that his administration would soon impose a 25% tariff on EU imports.

According to an analysis by the Peterson Institute for International Economics (PIIE), retaliation to induce the US to remove the original tariff is a dangerous strategy: desirable if the US backs down but risking additional debilitating protection if the US does not. The US still maintains a 25% tariff on light trucks as a legacy of a 1960s trade dispute with Europe.

It is unclear under what law, if any, Trump could claim power to impose tariffs over all imports from the EU. He imposed the 25% tariffs on steel, aluminum, and downstream products, under Section 232 of US trade law. This provision gives the president latitude to unilaterally impose tariffs without congressional approval in national security cases. Similar tariffs were introduced in his first term, but allies were given waivers. This time there are to be no exceptions.

The Section 232 tariffs alone will increase the costs of many products and services in the US economy, particularly those that use steel and aluminum intensively. The costs of automobile production in the US will rise significantly, and consumers will migrate to European and Asian models unless motor vehicles also receive protection.

The Trump administration also has signaled that it would broaden tariffs across products and partners under a misnamed policy of “reciprocity.” The president said he would impose the same tariffs on other countries as they impose on the US. The term carries a connotation of fairness, but the US policy is anything but fair: It appears to only level US tariffs up and contains language allowing America to escape strict reciprocity.

Nondiscriminatory value-added taxes in the EU are a particular bête noire. A more accurate characterization of the approach would be arbitrary unilateral tariffs, undertaken without any reference to existing World Trade Organization (WTO) or free trade agreement obligations.

According to PIIE, looking just at Trump’s planned 25% tariffs on the EU, beyond the immediate economic effects, this misguided policy would contribute to the further unraveling of the international trade architecture, which has served the US and the world well.

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