BRUSSELS (AFP) - The EU will on Wednesday (March 7) set out plans to strike back against United States President Donald Trump's threatened steel and aluminium tariffs, with flagship US products such as jeans, motorbikes and whiskey in the crosshairs.
No firm decision is expected as Trump has yet to sign into effect his plan to set tariffs to protect US carmakers from what he calls unfair competition, but French President Emmanuel Macron has demanded the EU be ready to act swiftly if he does.
European Commission chief Jean-Claude Juncker on Friday (March 2) threatened to hit big-name US brands such as Harley Davidson motorbikes, Levi's jeans and bourbon whiskey with import duties.
This prompted Trump to fire back a threat to tax cars from the EU, further fuelling fears of a full-on transatlantic trade war erupting.
"We are looking at possibilities to retaliate, meaning that we will also put taxes or tariffs on US imports to the European Union," EU trade commissioner Cecilia Malmstroem told the BBC on Monday.
Despite Juncker's headline-grabbing threat to iconic US brands, the hitlist the EU is working on does not mention specific businesses, using instead the dry language of customs regulations.
Malmstrom said the EU was also looking at "safeguard" measures to protect its industry - restricting the bloc's imports of steel and aluminium to stop foreign supplies flooding the European market, which is allowed under World Trade Organisation (WTO) rules.
Trump, elected on a promise to roll back the effects of globalisation on the US economy with an "America First" platform, said on Thursday he planned to impose 25 per cent tariffs on steel imports and 10 per cent on aluminium.
Juncker, who on Wednesday met Lakshmi Mittal, the boss of the world's top steelmaker Arcelor Mittal, said last week the EU would "react firmly" to protect European industry.
Europe exports around five billion euros' (S$8.2 billion) worth of steel and a billion euros' worth of aluminium to the US each year, and the commission estimates Trump's tariffs could cost some 2.8 billion euros.
As well as making it harder for European metal to find buyers in the US, tariffs could also mean other foreign producers redirect their output to the EU, pushing the market there down.
The first option envisaged by Brussels consists of "rebalancing" measures to compensate the value of the damage suffered, which it says would be in line with WTO rules.
This would mean taxing certain specific US products to send a political message to Trump - possibly targeting businesses located in states favourable to the president. It would take around three months for these measures to come into effect.
Brussels wants to maximise the political impact of its reprisals on the US while minimising the impact of a trade war on European consumers.
European Commission Vice President Jyrki Katainen told AFP on Friday the bloc could form a "coalition of like-minded countries" to file a complaint at the WTO, though this procedure usually takes around two years.
Katainen said he understood the US tariffs were more aimed at China, the world's biggest producer, which has flooded the globe with cheap steel, than the EU.
"We don't talk about it enough but overcapacity in the steel sector is largely due to China," the senior EU official said.