The European Union’s economic affairs commissioner told CNBC on Wednesday that Europe would respond in a proportionate manner to any tariffs imposed by US President Donald Trump.
“If we need to protect our economic interests, we will respond accordingly,” Valdis Dombrovskis told CNBC’s Steve Sedgwick on the sidelines of the World Economic Forum in Davos, Switzerland. spoke.
“If necessary, we are ready to defend not only our values, but also our interests and rights,” he added.
Since taking office on Monday, President Trump has repeatedly threatened to impose tariffs on EU goods coming into the United States, telling reporters that the EU is “very bad for us. That’s why they put tariffs on them.” That’s the only thing that will happen.” That way… there will be fairness. ”
He also said his administration is considering imposing an additional 10% tariff on Chinese imports starting in February.
Dombrovskis said the United States and Europe are strategic allies and it is important to cooperate geopolitically and economically.
He said European officials were in talks with their U.S. counterparts to find a “realistic” solution to the tariff debate, adding that any damage to economic ties between the two countries would hurt global economic growth. He pointed out that there is a possibility that
“It is important to maintain this trade and investment relationship as this fragmentation of the global economy sets in and there is a real risk of this happening and the IMF says it could mean up to a 7% reduction in global GDP.” “We estimate that,” Dombrovskis said.
The EU is keen to maintain economic ties with the US, with the two countries having the largest bilateral trade and investment relationship and “enjoying the most integrated economic relationship in the world,” the European Commission said. are.
The trade balance is a particular worry for President Trump, with the EU expected to have a surplus in goods traded with the United States in 2023, but a deficit in services during the same period.
In 2023, the EU exported more than 502 billion euros ($522 billion) of goods to the United States, and had an import surplus of more than 340 billion euros, according to European Commission data.
Good news for the US
Economists and financial institutions have warned of the potential impact of punitive trade tariffs on the global economy.
IMF First Deputy Managing Director Gita Gopinath said on Wednesday that the threat of U.S. tariffs, like other domestic economic stimulus measures such as tax cuts and deregulation, poses a negative risk for other countries.
“Due to positive market sentiment, many of these shocks may end up with some upside for the U.S., but pose downside risks for most of the rest of the world,” he said. said.
But he added that it was important to “wait and see” the exact number, level and scope of U.S. tariffs, as well as other countries’ reactions.
The IMF on Friday kept its global growth forecast largely unchanged, forecasting economic expansion of 3.3% in 2025 and 2026, below the historical average of 3.7%. The outlook was due to upward revisions in U.S. growth offsetting downward revisions in other major countries.
Gopinath said the forecast does not take into account President Trump’s recent comments on global tariffs, including new threats communicated to the EU, Canada, China and Mexico on Tuesday.
—CNBC’s Karen Gilchrist contributed to this report.
