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EU position attracts swift backing from European capitals

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Bloc ready to take 'proportionate countermeasures' if

needed

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Macron says Commission must defend bloc's interests

'resolutely'

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Trump's biggest grievance is merchandise trade deficit

July 12 (Reuters) - The EU is ready to retaliate to

safeguard its interests if the U.S. proceeds with imposing a

threatened 30% tariff on European goods starting on August 1,

European Commission President Ursula von der Leyen said on

Saturday.

However, von der Leyen, head of the EU executive which

handles trade policy for the 27 member countries of the EU, said

it was also ready to keep working towards an agreement by August

1.

"Few economies in the world match the European Union's level

of openness and adherence to fair trading practices," she said

in response to new threats by U.S. President Donald Trump on

Saturday escalating a trade war Europe had hoped to avoid.

"We will take all necessary steps to safeguard EU interests,

including the adoption of proportionate countermeasures if

required," she said of possible retaliatory tariffs on U.S.

goods entering Europe.

European capitals swiftly backed that position.

"As part of European unity, it is more than ever up to the

Commission to assert the Union's determination to defend

European interests resolutely," French President Emmanuel Macron

said on X.

German Economy Minister Katherina Reiche urged a statement

for a "pragmatic outcome to the negotiations".

"The tariffs would hit European exporting companies hard. At

the same time, they would also have a strong impact on the

economy and consumers on the other side of the Atlantic," she

said.

Spain's Economy Ministry backed further negotiations but

added that Spain and others in the EU were ready to take

"proportionate countermeasures if necessary".

Trump has periodically railed against the European Union,

saying in February it was "formed to screw the United States"

and asking why Europe exports so many cars but buys so few U.S.

cars in return.

His biggest grievance is the U.S. merchandise trade deficit

with the EU, which in 2024 amounted to $235 billion, according

to U.S. Census Bureau data. The EU has repeatedly pointed to the

U.S. surplus in services, arguing it in part redresses the

balance.

Combining goods, services and investment, the EU and the

United States are each other's largest trading partners by far.

The American Chamber of Commerce to the EU said in March the

trade dispute could jeopardise $9.5 trillion of business in the

world's most important commercial relationship.

"Europe must not allow itself to be intimidated by this, but

must soberly seek a solution at the negotiating table on equal

terms," said Dirk Jandura, president of the German exporters

association BGA, adding the latest threats were a

"well-rehearsed" part of his negotiating strategy.

Carsten Brzeski, global head of macro at ING, said Trump's

move suggested that months of negotiations remained deadlocked

and that things were inching towards a make-or-break moment for

the transatlantic trade relationship.

"The EU will now have to decide whether to budge or to play

hardball," he said. "Its hard to draw real conclusions right now

other than this will bring market volatility and even more

uncertainty."

Cyrus de la Rubia, chief economist at Hamburg Commercial

Bank, noted that the brunt of the U.S. tariffs, if implemented,

would be felt by U.S. consumers.

"The EU should take a hard line in negotiations, because

model calculations show that tariffs against the EU have a

stronger negative effect in the US than in the eurozone."

That said, there would also be clear repercussions for the

euro area economy, already struggling with weak growth.

The European Central Bank had used a 10% tariff on EU

exports to the United States as the baseline in its latest

economic projections, which put output growth in the euro area

at 0.9% this year and 1.1% the next and 1.3% in 2027.

It said a 20% U.S. tariff would curb growth by 1 percentage

point over the same period and also pull down inflation to 1.8%

in 2027, from 2.0% in the baseline scenario. It did not even

offer an estimate for the possibility of a 30% tariff.