Trade Tensions Escalate: EU and US Face Off Over Tariff Threats

The European Commission has called for clarification from the United States after President Donald Trump suggested imposing a 50% tariff on EU imports starting June 1. Trade officials from both sides are scheduled to discuss the matter, with the Commission refraining from commenting until after the talks.

Trump's announcement has already rocked European financial markets, causing stock declines and affecting euro values, while government bond yields plummeted. Economists recognize the move as a significant escalation in trade tensions, necessitating potential counteractions from the EU that could impact both economies.

Currently, the EU is subjected to various US tariffs, with further increases planned. In efforts to address the US trade deficit with the EU, Washington has issued demands involving reductions in non-tariff barriers. However, the EU has proposed reciprocal benefits, including zero tariffs on industrial goods and increased purchases of US commodities to mitigate trade conflicts.

(With inputs from agencies.)