Exclusive: France, Germany divided over how to retaliate to Trump tariff threats

US President Donald Trump’s swift announcement of new trade sanctions on trading partners appears to have wrong footed the EU as countries are divided over whether to adopt a more hawkish rapid or measured paced response in retaliation, with France and Germany on opposing sides, according to several sources Euronews spoke to.

On Friday, the European commission promised to react “firmly and immediately” to Trump’s announcement of reciprocal tariffs to its trade partners.

Spearheading those who emerged from an emergency görüntü conference of EU trade ministers held on Wednesday evening favouring a rapid response from the Commission is France, by contrast Germany, Italy and Hungary are clearly in the doveish camp, the sources said.

Citing “national security”, Trump announced on Monday he intended to impose 25% tariffs on imports of aluminium and steel, including from Europe.

The executive order, which will take effect on 12 March, was followed on Thursday by the announcement of reciprocal tariffs on US trade partners on the basis of “country-by-country” examination, a process slated to take a matter of weeks.

“Every [US] measure announced calls for an immediate response when it arrives,” one official characterised the hawk response made during Wednesday’s call to Euronews. Negotiation should be secondary, this person said, to avoid too many concessions being made to the US administration. 

For the doves, “it makes more sense to wait for the next measures and keep in touch with the Americans”, an EU diplomat from the dove camp told Euronews.

These countries favour only very concrete retaliatory measures being considered, rather than reflecting the US approach of making up-front announcements – such as yesterday’s US reciprocal tariff call – which require time and calculation to be realised.

“The response must be swift but not precipitous,” an official from a hawkish country conceded.

Hungary, whose Prime Minister Viktor Orban is a Trump ally, is adopting a “careful” approach, another EU diplomat said, preferring for no retaliatory to be taken before 12 March, when the tariffs on steel and aluminium will come into force. For its part Italy wants to maintain dialogue with the US before resorting to retaliatory duties, the same diplomat said.

“The member states are united and determined to protect the European steel and aluminium sector,” Polish trade minister Krzysztof Paszyk, said on Wednesday night, after chairing the ad-hoc trade ministers web exchange on behalf of Poland’s presidency of the EU Council.

On Wednesday EU Trade Commissioner Maros Sefcovic was warned by Howard Lutnick, set to be confirmed new US commerce secretary, that Trump’s aim was an “overhaul of US trade policy beyond the announced steel and aluminium tariffs,” according to a third EU diplomat. Sefcovic has said that the bloc will respond in a “firm and proportionate” way. 

In 2018 the EU hit back at tariffs on European steel (25%) and aluminium (10%) introduced during Trump’s first term as US president. It then retaliated with duties on €2.8 billion of US products, before a temporary truce was brokered under the Biden administration, in a deal which expires at the end of March.

Since 2018, it has strengthened its arsenal of retaliatory measures with anti-coercion tools which includes barring the right to participate in public procurement tender procedures, or trade in services and trade-related aspects of intellectual property rights.

The EU and the US traded €1.5 trillion in goods and services in 2023.

After a meeting on Wednesday with Canada’s Prime Minister Justin Trudeau, President of the European Council Antonio Costa said in a tweet that “trade agreements are better than trade tariffs”.

The EU is also aiming to diversify its trading partnerships. A free trade deal was signed with the Mercosur countries – Argentina, Brazil, Paraguay and Uruguay – as well as one with Switzerland before Christmas. A renewed trade deal was reached with Mexico in January and negotiations have resumed with Malaysia. All of the EU Commissioners will travel together to India at the end of the month to negotiate a strategic partnership, including discussions on trade.