The European Union is preparing a package of potential emergency measures to support parts of its economy that could be hit the hardest by US President Donald Trump’s sweeping tariffs, according to people familiar with the matter.
The European Commission, the EU’s executive arm, is working on short-term economic support proposals to go alongside plans to advance reforms and competitiveness in key sectors as well as to improve the functioning of the bloc’s single market, said the people, who spoke on the condition of anonymity.
Trump is set to announce so-called reciprocal tariffs later Wednesday to strike out against what he considers to be unfair levies on US goods as well as non-tariff barriers, such as domestic regulations and how countries collect taxes, including the bloc’s value-added tax, digital taxes and regulations. The EU says its VAT is a fair, non-discriminatory tax that applies equally to domestic and imported goods.
Any potential EU support measures will depend on what the US announces, one of the people said.
German bonds erased gains after the report, with the 10-year yield trading stable on the day at 2.69% after falling to as low as 2.65%. The euro extended gains to 0.4%, reaching an intraday high of $1.0839.
A spokesperson from the commission declined to comment.
The US hasn’t indicated the exact scope of the measures nor the tariff level it will apply on the EU but officials in the bloc expect the rate to fall anywhere between 10% and 25%. Details of the plans were still in limbo on Tuesday, Bloomberg reported earlier.
Trump has already declared a 25% import tariff on steel and aluminum as well as on cars and some auto parts. The EU announced a set of countermeasures of up to €26 billion ($28.1 billion) in response to the metals duties, which are expected to enter into force in mid-April.
Trump has said he’ll impose other sectoral duties on products including lumber, pharmaceutical goods and semiconductors.
An analysis by Bloomberg Economics found that a a blanket tariff increase of 25 percentage points could hit about 70% of EU trade flows to the US in the medium term. If EU exporters fail to find new markets, that could put between 1.5% and 2% of euro-area GDP at risk.
