Taoiseach Micheál Martin has warned that tariffs by the US on EU goods would have a negative effect.
After imposing tariffs on Canada and Mexico over the weekend, US President Trump said last night that tariffs “will definitely happen with the European Union”.
EU-US trade is valued at $1.3 trillion. The US has a trade deficit of $131.3 billion, meaning it imports more from Europe than it exports.
Donald Trump has repeatedly bitterly complained about this deficit.
Last month, he told the World Economic Forum in Davos, “I love Europe, but they [the EU] treat the United States very very badly”.
The Taosieach is in Brussels for a “leaders retreat” of EU 27 leaders. They are supposed to be discussing security and defence, but the meeting has been eclipsed by Donald Trump’s threat.
Arriving at the Egmont Palace this morning, the Taoiseach said that the EU-US relationship is the “biggest economic relationship”.
“In our view, protectionism more generally, will harmed citizens, no matter where they reside and that tariffs are a negative, in respect of economic development.
“We’re a small open economy, we depend on trade.”
Prime Minister Trudeau has announced that it will retaliate against the tariffs the US has imposed on Canada.
Last night he spoke to the President of the European Council, António Costa. The two agreed to continue to work together “in all respects of our cooperation”.
Asked if he thought the EU should respond, the Taoiseach said “the European Union has to act as one. We are an economic entity. We have a single market. Trade is, as you know, a competency of the [European] Commission. But obviously member states have an input into how Europe will respond.”
He added: “So first of all, we have to see what happens and assess it and measure it…But I wouldn’t do anything prematurely right now until we see, what exactly is being proposed if something is being proposed.”
The European Commission has previously said it has a list of retaliation tariffs ready in case Trump makes his move. This happened in 2018 during his first term as president when the EU imposed tariffs on consumer products including Harley-Davidson motorcycles, bourbon whiskey and pairs of jeans.
Economists have warned that tariffs could drive up inflation.
This morning the EU’s stats agency said inflation rose to 2.5 percent in January, up 0.1 percent on December. The European Central Bank has a mandate to keep Eurozone inflation down to two percent.