Flags of the European Union fly outside the Berlaymont Building, the European Commission headquarters, in Brussels, Belgium, Jan. 29, 2025. [Photo/Xinhua]

The European Commission on Monday rejected the rationale for new U.S. tariffs on European exports, vowing to protect businesses, workers, and consumers across the bloc.

The statement came after U.S. President Donald Trump threatened to impose 25-percent tariffs on all steel and aluminum imports, reigniting fears of a transatlantic trade war.

European Union (EU) leaders swiftly condemned the proposed tariffs, which are expected to be formally announced later on Monday. The Commission said there is "no justification" for the U.S. measures, calling them unlawful and economically harmful, particularly given the deeply integrated EU-U.S. supply and production chains.

With European leaders signaling their readiness to retaliate, concerns are growing that the looming trade dispute could strain economic ties and disrupt global markets.

Tariffs could backfire

The European Commission, the EU's executive body, strongly criticized the proposed tariffs, warning they would ultimately hurt U.S. businesses and consumers.

"Tariffs are essentially taxes," it said in a statement, emphasizing that the move would increase costs for American companies, drive inflation, heighten economic uncertainty, and disrupt global market integration. Given the deep interdependence between European and American industries, the EU warned that such measures would be counterproductive, effectively imposing taxes on U.S. citizens as well.

European officials fear a repeat of 2018, when Trump's previous steel and aluminum tariffs triggered swift EU retaliation. At the time, Brussels imposed countermeasures on U.S. goods such as whiskey, motorcycles, and orange juice.

With the formal announcement of the new U.S. tariffs expected later on Monday, European leaders are bracing for another escalation in trade tensions.

EU weighs retaliation

France was among the first to respond to Trump's tariff threat, with Foreign Minister Jean-Noel Barrot warning on Monday that the EU would retaliate if the proposed tariffs take effect.

"There is no hesitation when it comes to defending our interests," Barrot told French television TF1, recalling how the EU countered similar tariffs in 2018 and vowing to take the same approach if necessary.

Germany, Europe's largest economy, is also preparing for action. A spokesperson for the German Federal Ministry for Economic Affairs and Climate Action stated that while the EU and Germany are working to prevent the tariffs, they stand ready to implement countermeasures if needed.

During a televised debate on Sunday ahead of upcoming elections, German Chancellor Olaf Scholz warned that the EU could "act within an hour" if Trump proceeds with tariffs on European goods.

Industry leaders are also pushing for a firm response. Gunnar Groebler, president of the German Steel Association, urged the EU to react in a "united, strategic, and swift manner" to counter the tariff threat. "The U.S. is the largest buyer of European steel, importing around 1 million tonnes of mostly special steels from Germany alone each year," he noted.

A lose-lose scenario

French President Emmanuel Macron cautioned that tariffs on EU goods would not be in the interests of the United States.

"If Washington imposes tariffs across multiple sectors, it will drive up the cost of goods and fuel inflation in the United States," Macron said, pointing out that European savings play a crucial role in financing the U.S. economy.

Economic experts share Macron's concerns. Paul Johnson, director of the London-based Institute for Fiscal Studies, warned that Trump's planned tariffs could push up interest rates worldwide, having ripple effects on global monetary policy.

"It is going to create additional inflation, at the very least, in the United States, and that will have knock-on effects globally, particularly on interest rates," Johnson explained.

Ferdinand Dudenhoeffer, a German automotive expert, argued that Trump is leveraging economic power to siphon off jobs and prosperity from other countries through his tariff policies. "He knows no friends or enemies. Even U.S. car manufacturers GM and Ford would suffer considerably from tariffs on cars from Canada and Mexico," he said.

Dudenhoeffer noted that U.S. net vehicle imports totaled 5.6 million units in 2024. "Trump might ask how many jobs could be created if all these vehicles were produced domestically," he said.

Despite the growing alarm, some analysts hold that the impact of Trump's tariffs may be limited. Christian Helmenstein, chief economist of the Federation of Austrian Industries, described Trump's plan as an "unfriendly pinprick" but not a severe blow.

He told the Austrian newspaper Kurier that the U.S. imports about a quarter of its steel needs, with much of it coming from Canada, Brazil, Mexico, and South Korea rather than Europe.

But Harald Oberhofer, an economist at the Austrian Institute of Economic Research, described Trump's tariff plans as "an economically high-risk game."

He pointed out that the United States was Austria's largest export growth market last year amid weak overall exports and a trade war could further weaken Austria's already fragile economy, which is projected to grow by just 0.6 percent this year.

As Trump moves closer to making his tariff announcement official, European leaders are making their stance clear: if the U.S. imposes new trade barriers, the EU stands ready to defend its economic interests with countermeasures.

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