The European Union is preparing for a trade fight with America in the wake of the Trump administration's push for a higher baseline tariff as a prerequisite for a trade agreement with the bloc, The Wall Street Journal reported.
The EU is mulling countermeasures in response to a report Friday that President Donald Trump is seeking baseline tariffs of 15%-20% in any trade deal with the bloc of 27 European countries. Even Germany, which had been pressing for an acceptance of Trump's baseline tariffs of 10% to reach a quick deal with the U.S., is joining countries like France in a push for a tougher stance against the new demands, according to the Journal's report on Sunday.
"All options are on the table," a German official said Friday, according to the Journal. "If they want war, they will get war."
Trump set a deadline of Aug. 1 for trade deals to get reached, or tariffs of 30% would kick in.
He has said for years that Europe has some of the toughest trade barriers, and his tariffs are reciprocal.
Commerce Secretary Howard Lutnick said Sunday the deadline is firm — "they're going to start paying the tariffs on Aug. 1" — but added he was confident a deal would get reached with the EU.
"These are the two biggest trading partners in the world, talking to each other. We'll get a deal done. I am confident we'll get a deal done," Lutnick said in an interview with CBS' "Face the Nation."
The European Commission, charged with the EU's trade policy, said Sunday it remains engaged in negotiations with the U.S. but added that all options are on the table should the countries not reach an agreement, according to the report.
"They've been very, very, I would say, cool with the U.S. so far, and now that we're approaching the deadline, they have to sound a bit more aggressive," Arnaud Girod, head of economics at the financial service firm Kepler Cheuvreux, told CNBC. "Not getting a better deal than the U.K. is … an issue for the EU, and they have to prove that the whole structure of the EU is helpful."
However, the commission doesn't intend to launch retaliatory measures prior to the Aug. 1 deadline, the Journal reported.
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