Europe Warns Trump of Strong, United Retaliation

France insisted on Sunday that Washington should expect united retaliation from Europe to further tariff increases, even as Germany signaled that it was prepared to negotiate, Reuters reports.

“If tomorrow there is an increase in tariffs, like in the car industry, our reaction should be united and strong to show that Europe is a united and sovereign power,” French Finance Minister Bruno Le Maire was quoted as saying.

“The question is no longer whether or not there will be a trade war, the war has already started,” Le Maire said at an economic conference in Aix-en-Provence, southern France.

“Let it be known that if we are attacked, we will react collectively and we will react firmly.”

US President Donald Trump hit the EU, Canada and Mexico with tariffs of 25% on steel and 10% on aluminum at the start of June, ending exemptions that had been in place since March.

Trump further escalated tensions last month with threats to impose a 20% import tariff on all EU-assembled vehicles.

With Germany’s powerful car industry facing the threat of higher US duties, German Chancellor Angela Merkel said last Thursday she would back a lowering of European Union levies on imports of US cars.

The US currently imposes a 2.5% tariff on imported passenger cars from the EU and a 25% tariff on imported pickup trucks. The EU imposes a 10% tariff on imported American vehicles.

Under World Trade Organization rules, the EU cannot lower import tariffs for only US-made cars. It would have to reduce them for all WTO members, Reuters pointed out.

While French carmakers would be little affected by US tariffs because they have little exposure to the American market, they would face stiff competition from Asian producers if EU tariffs were cut, a prospect that worries the French government, the report noted.

Meanwhile, the International Monetary Fund Director Christine Lagarde said Saturday the European Union has “a card to play” if it offers a united front in its response to the trade war pitting the United States against China, AFP reported.

“In the show of force we see coming to bear ... between the United States on the one hand and China on the other, who represent two totally different forms of capitalist impetus, Europe can play a very particular card,” Lagarde told an economic forum in the southern French city of Aix-en-Provence.