- Germany’s DAX index falls nearly 10% at opening on Monday
- Key stock markets in Asia have continued to fall
- US stock markets are also expecting further losses on Monday
- EU trade ministers are meeting to discuss how to respond to Trump’s 20% tariffs
- US President Donald Trump has shown no signs of backing down, calling the global market turmoil a necessary ‘medicine’
EU trade chief calls for ‘paradigm shift’ in international trade
The European Union’s trade chief has said that Monday’s meeting will focus on the “paradigm shift” in international trade, according to DW.
“What we are going to discuss is how to position Europe in what I would describe as the paradigm shift of the global trading system,” Maros Sefcovic told reporters before meeting with the bloc’s 27 trade ministers.
Ahead of the 20% tariffs against the EU coming into effect on Wednesday, Sefcovic said “our next move in relation vis-a-vis the United States but also how to prepare our trading system back in the European Union to prevent eventual trade diversion.”
There have been calls for a united position, but splits have already emerged with France and Germany pushing for the use of the so-called “trade bazooka,” a relatively recent option that would allow the EU to aggressively target US sectors.
But Ireland, reliant on US investment, has come out against using the “anti-coercion instrument,” as it is officially known, with Irish Trade Minister Simon Harris calling it the “nuclear option.”
What can Europe do to respond to Trump’s tariffs?
Trump said he would slap 20% tariffs on European Union goods, to which the bloc has promised countermeasures if negotiations with Washington fail, reports DW.
The United States and the EU have the world’s largest commercial relationship, trading some €1.6 trillion ($1.7 trillion) in goods and services in 2023.
Trump frequently hits out at the EU over the balance, given the higher volume of European goods sold in the US compared to vice versa.
US goods imports into the EU totaled €334 billion in 2024, against €532 billion of EU exports to the US, according to EU statistics agency Eurostat.
However, the overall balance of trade is roughly even.
While Europe exports more goods to the US than it imports in the opposite direction, that situation is reversed when looking at services.
That means the service sector, particularly tech, could be the main avenue through which Brussels could hit back.
Economists say that Europe could widen the trade war, in particular by targeting Big Tech — a category more vulnerable to retaliation because of the US surplus.
Brussels could hit back with a tax targeting US tech titans like Google, Apple, Meta, Amazon, and Microsoft — a move French officials have pushed for.
