EU-US tariff war could lead to 7% fall of global GDP - EU commissioner

That’s according to Valdis Dombrovskis, the European Commissioner for Economy, Implementation and Simplification, who spoke at a briefing during a visit to Kyiv on Thursday.

As regards EU’s readiness to introduce counter-tariffs on U.S. goods if Washington makes the relevant step, the commissioner said: “This kind of trade escalation serves no one's interest. Neither European economy, nor U.S, economy itself.”

He cited the estimates made by the International Monetary Fund that, if that kind of economic fragmentation were to take place and trade was to concentrate within certain blocks, “that could lead over the medium term to seven percent lower global GDP”.

“It's like taking Germany and France’s combined economies out of the world map, so it can have substantial negative impact,” Valdis Dombrovskis stressed.

He reiterated the EU commitment to multilateral rules-based trading system and engaging with U.S authorities, including to prevent escalation of trade intentions.

At the same time, he noted that the U.S had already imposed the tariffs on EU steel and aluminum, and the EU has been “very clear” that will be responding “in proportionate way”.

The first set of counter-tariffs will enter into force on April 1, after which the EU will be preparing the next set for mid-April, the commissioner explained.

“That has been our signal to U.S authorities that, should there be further escalation of tariffs, the EU will be responding in a proportional but firm way,” said Dombrovskis.

As reported earlier, U.S. Secretary of State Marco Rubio said that, after Washington imposed tariffs on its own trade partners, the countries may launch bilateral talks on new trade agreements.

He added that the U.S. would respond to any moves by other countries to impose tariffs on U.S. goods.