EU finance chiefs urge caution in retaliation over Trump tariffs

German finance minister Joerg Kukies called for Europe to 'constructively engage' with the new administration, adding that it’s not yet clear what steps Mr Trump might take

Finance Minister Jack Chambers: 'We need to be careful that we don’t get into a tit-for-tat of retaliatory measures.'

EU finance chiefs warned against precipitous moves to counter Donald Trump’s threats of tariffs on goods from the bloc on his return to the White House.

“We need to be careful that we don’t get into a tit-for-tat of retaliatory measures and protectionism, which will add significant costs and burdens,” Finance Minister Jack Chambers told reporters ahead of a meeting of EU counterparts.

Mr Trump was sworn in on Monday shortly before European finance ministers sat down for a dinner in Brussels, where they discussed transatlantic relations. The new US president has threatened to reboot trade wars across the world.

After his repeated criticisms of the EU over its practices, officials are bracing and debating how they could respond.

German finance minister Joerg Kukies called for Europe to “constructively engage” with the new administration, adding that it’s not yet clear what steps Trump might take.

“That is why this evening’s discussion will certainly not focus on specific measures by the European Union, because we still do not know which measures by the US government we will be able to respond to,” he told reporters.

Vulnerable and exposed

Still, Mr Kukies acknowledged that Germany’s export-driven economy is one of the most vulnerable and exposed to the impact of trade tariffs.

“It is in the spirit of partnership that we are approaching the EU-US relationship, but of course, we need to see what concrete ideas and initiatives the Trump administration will unveil,” European economy commissioner Valdis Dombrovskis said.

The EU is preparing an offer to deepen bilateral cooperation with the US in areas including liquefied natural gas purchases, but at the same time has drawn up a list of potential duties in order to respond to Mr Trump.

“Rather than focusing on retaliation, we should actually focus on the challenges of Europe, challenges about decreasing competitiveness, the increasing productivity gap that we face,” Belgian finance minister Vincent Van Peteghem said.

He also pointed to the EU’s higher energy costs and more burdensome regulations.

For Paschal Donohoe, the president of the Eurogroup, the EU and US have the potential to help each other sustain their economic growth.

“America still needs allies, and Europe can be one of those allies,” Mr Donohoe told Bloomberg in an interview. 

“We need to look at how we can approach that new relationship from a stronger position.”

• Bloomberg