Hawks against pigeons: How are EU member states responding to the US trade war?
During the 90-day hiatus given to transatlantic trade tensions, the EU hopes to start negotiations with Washington while aiming to develop a strategy regarding the tariffs imposed by the US. However, there is a division between hawks and doves on how to proceed.
As the EU weighs its response to US tariffs and hopes to begin negotiations with the US, a rift has emerged within the bloc regarding the intensity and scope of potential retaliatory measures in recent weeks. While hawks are calling for a solid and united front, doves are urging caution, warning against escalation and economic fallout. Hawks are ready to use the EU's commercial 'nuclear' weapons. For hawks, the entire issue is about demonstrating power against the Trump administration and ensuring they are in a strong position for negotiations aimed at lifting the 25% and 10% tariffs currently imposed on aluminum, steel, and cars. They argue that the EU could not only impose tariffs on goods but also target US services, which currently yield a trade surplus for the US against the EU, and use its 'nuclear' weapon to block access for US companies to European contracts or deprive them of licenses and intellectual property rights.
France is one of the most combative countries ready to enter the ring with the US. On April 4, French President Emmanuel Macron described the 20% 'reciprocal' tariffs imposed by the US on EU imports as 'ruthless and baseless.' Macron warned French business leaders that "[investments in the US] announced in recent weeks should be suspended for a time." French diplomats in the corridors of the Council, where EU member countries come together, are pushing for a strong response to US tariffs. Following the EU's imposition of a 25% tariff on a range of American products on Wednesday, Paris wants to go further in retaliating against the US's 'reciprocal' tariffs and the 25% US tariffs on cars that have been suspended for 90 days. French Trade Minister Laurent Saint-Martin stated on Monday, "I don't think we should rule out any options regarding goods or services," adding, "The way to approach this issue is to open the very comprehensive European toolbox that can be extremely aggressive in return. Clearly, I am considering the anti-dumping instrument." However, the French president also admitted that the French economy is not as exposed to US trade as some other countries: "Exports to the US constitute 1.5% of our gross domestic product [GDP]. This figure is 3% for Italy, 4% for Germany, and 10% for Ireland." France has also fought to keep Bourbon whiskey off the first list of retaliatory measures to prevent its wines from incurring the wrath of the US, which Trump has threatened with a 200% tariff.
Germany is currently awaiting Friedrich Merz, who is preparing to take over the chancellorship. According to Eurostat, the EU's statistics office, Germany, which is the largest exporter to the US with goods worth €157.7 billion projected to be sold across the Atlantic in 2023, has been heavily affected by the US tariff assault. Merz stated regarding Trump's temporary suspension of tariffs, "Europeans are determined to defend themselves, and this example shows that unity works above all." The German government, advocating a moderate 'wait and see' approach, has sided with France and appears ready to use the EU's commercial 'nuclear' weapon if necessary. On April 7, in an environment where stock markets were falling, German Chancellor Olaf Scholz's trade minister, Robert Habeck, clearly expressed the need for the EU to intervene strongly against the US. "The markets are already collapsing, and the damage could be even greater. Therefore, it is important to act openly, resolutely, and cautiously. This means realizing that we are in a strong position," he said, adding, "America is in a weak position." In addition to tariffs, Germany has also put forward the potential of using anti-dumping measures as retaliation against US tariffs. Habeck pointed to a 'broad package of retaliation' that could be extended to target US digital services, saying, "These are measures that go well beyond tariff policy."
Spanish Prime Minister Pedro Sanchez initially adopted a more assertive tone in response to the Trump administration's tariffs. While advocating for dialogue and multilateral cooperation, Sanchez supported proportional countermeasures and called for unity in Europe against US commercial threats. "Europe must now be more prepared than ever and demonstrate this unity to respond to any possibility," he said. Economy Minister Carlos Cuerpo also invited his EU counterparts to remain open to "all potential avenues for retaliation against US tariffs" in an interview. "We are open to negotiations, open to trade, but we will not be naive," he added. However, after Trump declared a truce on tariffs, Sanchez viewed this move as 'a door open to negotiation' and an opportunity for the renewal of international cooperation. After initially criticizing the tariffs as 'unfair and unjust,' Sanchez has recently adopted a more dovish stance towards dialogue. During an official visit to Vietnam, he reiterated his support for open trade, arguing that global trade is not a zero-sum game and that trade wars lead to mutual losses.
Doves are worried about the escalation of tensions. Many member countries within the bloc prefer a conciliatory approach, prioritizing diplomacy and de-escalation over conflict. While Hungary stands out with its stance, this measured approach does not imply a rejection of legitimate defense. All EU countries outside of Hungary voted on Wednesday for the first wave of EU retaliation. However, many countries are exercising caution by opting not to advocate for the bloc's strongest retaliatory tools, fearing that such moves could lead to a dangerous escalation.
Italian Prime Minister Giorgia Meloni positioned herself among the 'doves' in transatlantic trade relations by favoring dialogue over the Trump administration's tariff policies. "No one benefits from a trade war, not even the US," Meloni stated, indicating her intention to address the issue with Trump to find positive solutions without escalating tensions. She announced plans to meet with Trump on April 17 in Washington to discuss the reciprocal removal of industrial tariffs between the US and the EU. This meeting is seen as an opportunity to reaffirm her determination for constructive dialogue and joint solutions following the declaration of a truce on tariffs for 90 days. Meloni also emphasized the importance of the US market for Italian exports, which is expected to reach €67.3 billion in 2023, warning that new tariffs could seriously affect Italian producers. "I maintain my belief that we must work to prevent a trade war that benefits neither the US nor Europe," she said.
Irish Prime Minister Micheal Martin has been a consistent advocate for maintaining good trade relations on both sides of the Atlantic. This stance is shaped by the country's economic vulnerability to tariffs due to significant export ties with the US. Rejecting retaliatory measures, Martin insisted on negotiation as the way forward. Calling for the EU to present 'a united front,' he also emphasized the importance of maintaining strong transatlantic trade ties. "Commitment is key," he said. "Our goal is to address this issue in line with fundamental priorities such as preserving employment in Ireland and maintaining economic infrastructure." Martin warned that tariffs do not 'help economic growth.' Economic models predict that a 10% tariff could reduce Ireland's GDP by 2.5% and domestic output by 1.7%. Ireland's exports to the US are projected to be €51.6 billion in 2023. The pharmaceutical sector, which makes up more than half of Ireland's exports to the US, continues to be a source of concern. Although currently exempt from US tariffs, the sector is considered at risk in any potential escalation in the future.
Despite being exposed to US tariffs due to its dependence on the German automotive industry, Hungary does not want to retaliate against US tariffs. It was the only country that voted against the first wave of the EU's retaliation against US tariffs on Wednesday. Prime Minister Viktor Orban, who is politically close to Donald Trump, seems to hope that an economic agreement with the US will balance the impact of US tariffs on his country. At the annual conference of the Hungarian Chamber of Commerce and Industry held on March 8, Orban stated, "There will be a Hungarian-American economic cooperation package that will significantly help the Hungarian economy. Even if a tariff war breaks out, it would be good for us – of course, like all other EU countries, Hungary would lose." On Monday, Trade Minister Peter Szijjarto blamed the Commission for not cooperating on tariffs with the US. "The issue was not complex," Szijjarto said, "Tariffs on the automotive industry, which is the backbone of both economies, should have been reduced, and everyone would be better off."