Brussels warning to White House over ‘harmful’ tariffs

The European Union yesterday warned that tariffs threatened by Donald Trump could ‘upend global trade’ and would be ‘extremely harmful’ to its economic recovery hopes.

The warning from Brussels came as it forecast an acceleration of growth from a dismal 0.8 per cent this year to 2.3 per cent in 2025.

But commissioners admitted that this could be dragged lower if there is a ‘further increase in protectionist measures by trading partners’. That could weigh on the EU’s ‘highly open economy’, the forecast said.

Trump has suggested imposing tariffs of 10 per cent or more on all goods imported into the United States, which is Europe’s main trading partner.

That has sparked fears of a damaging tit-for-tat trade war. Paolo Gentiloni, Europe’s economic commissioner, yesterday described the annual trade flow of up to £1.2 trillion between the US and Europe as ‘the world’s most important’.

‘And in this context, a possible protectionist turn in the US trade policy would be extremely harmful for both economies,’ he said.

The eurozone is already suffering from stagnant growth mainly thanks to the woes of Germany, its biggest economy.

Figures from Germany’s Ifo Institute yesterday highlighted the crisis. It found that the share of the nation’s companies that ‘fear acutely for their economic survival’ has risen to 7.3 per cent, up from 6.8 per cent in October.

Germany and Italy are at greatest risk from tariffs which would be part of an ‘America first’ stance of the second Trump term in office. Trump has described ‘tariff’ as ‘the most beautiful word in the dictionary’.

The euro has slumped as traders digest the implications of Trump’s win.

Britain would not be immune to a trade war, with UK exports to the US totalling £188.2billion in the year to June.

The UK may also be vulnerable to a downturn in the EU triggered by tariffs, as it accounts for 42 per cent of Britain’s exports.

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