EU-US tariff war could cause global GDP to fall by 7% – EU commissioner

This was announced by Valdis Dombrovskis, European Commissioner for Economic Affairs, Implementation and Optimisation, who spoke at a briefing during his visit to Kyiv on Thursday.

Regarding the EU's readiness to impose retaliatory tariffs on American goods if Washington takes the appropriate steps, the commissioner noted: “This kind of trade escalation does not justify the interests of either side. Neither the European economy nor the US economy as a whole benefits from this.”

He cited International Monetary Fund estimates that if such economic fragmentation occurs and trade becomes concentrated in certain blocs, “it could reduce global GDP by seven percent over the medium term.”

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“This would be like removing the combined economies of Germany and France from the world map, so it could have serious negative consequences,” Valdis Dombrovskis emphasized.

He reaffirmed the EU's commitment to the rules-based multilateral trading system and to cooperation with US authorities, including to prevent the escalation of trade intentions.

At the same time, he noted that the US had already imposed tariffs on EU steel and aluminium, and the EU had “made it very clear” that it would respond “proportionately”.

The European Commissioner explained that the first package of retaliatory duties would come into force on April 1, after which the EU would prepare the next package by mid-April.

“This was our signal to the US authorities that if tariffs are further increased, the EU will respond proportionally, but harshly,” Dombrovskis said.

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As reported earlier, US Secretary of State Marco Rubio said that after Washington imposed tariffs on its trading partners, countries could begin bilateral negotiations on new trade agreements.

He added that the United States would respond to any actions by other countries to impose tariffs on American goods.