EU threatens US tech but keeps door open to Trump tariff talks

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00:00And reactions from trade blocs and other world leaders are still coming in.

00:05German Chancellor Olaf Scholz slammed the US tariffs as fundamentally wrong and warned

00:10that the European Union could retaliate by targeting American tech titans.

00:15While on a larger continental scale, the European Commission President Ursula von der Leyen

00:20promised Brussels was preparing further countermeasures, but added it was not too late to address concerns

00:26through negotiations.

00:27Let's take a listen.

00:29Reaching for tariffs as your first and last tool will not fix it.

00:37This is why from the outset, we have always been ready to negotiate with the United States

00:46to remove the remaining barriers to transatlantic trade.

00:50At the same time, we are prepared to respond.

00:55We are already finalizing the first package of countermeasures in response to tariffs

01:00on steel.

01:02And we're now preparing for further countermeasures to protect our interests and our businesses

01:09if negotiations fail.

01:13To find out more about the European Union's reaction to the new trade barriers, let's

01:17hear from our Brussels correspondent, Dave Keating.

01:20Dave, thank you for joining us on the programme.

01:23Which of the European sectors are expected to be hit the hardest?

01:28Well, the steel and aluminium sectors and the automotive sectors are going to be hit

01:35the hardest, fastest, because those are the tariffs that were already announced before

01:40yesterday.

01:41But in terms of yesterday's tariffs, which are new, we can see already from the market

01:47reaction which sectors are going to struggle the most with this.

01:51The fashion and luxury sectors in Europe, as well as textiles in general, took a major

01:57hit today.

01:58There are two reasons for that.

02:00One is there are a lot of luxury brands in Europe that heavily export to the United States,

02:06but also textiles that are manufactured in Southeast Asia, which were the most hit by

02:12Trump's tariff with these astronomical tariff rates, also by many European chains.

02:19If there are problems with the supply chain there in Southeast Asia, it's also hitting

02:23clearly the textile sector.

02:26Other sectors that are expected to be pretty hit are machinery and equipment.

02:30We heard in the report there about Airbus, that's just one example of a European company

02:35that is exporting a lot of equipment over to the US.

02:39For the moment, pharmaceuticals and chemicals are exempted from these tariffs.

02:44That is a major export market from the EU to the US.

02:48The future of that is unclear.

02:50There are rumblings that the pharmaceuticals and chemicals could be brought into those

02:54tariffs.

02:55That's why you saw them there at that meeting with President Macron today, because that

02:59is another sector that if it was hit by tariffs, if that exemption goes away, which the White

03:04House has suggested it could, they could be majorly, majorly impacted.

03:09We've just heard from the EU Commission President Ursula von der Leyen that Brussels was ready

03:14to retaliate with its own countermeasures.

03:17Any details as to what they may be?

03:22We didn't get any new details in that video statement this morning by President von der

03:26Leyen.

03:27She said the EU is ready to strike back, but they're still holding out hope that the 20%

03:32rate can be negotiated down over the next week.

03:35It is set to take effect next week.

03:38They appear to be in a holding pattern for the moment until the 20% tariff takes effect

03:43next week.

03:45We already know that they've prepared this package of sanctions, which President Macron

03:49was speaking about earlier today, that would impact 26 billion euros of goods.

03:54It was always intended to have two phases.

03:57The first phase is basically just mirroring the steel and aluminum tariff retaliation

04:02that took place already in the first term of Trump's presidency.

04:07That's going ahead in mid-April.

04:10That's for sure going ahead.

04:11The second phase is in question because it was already delayed.

04:17National governments requested that the commission delay that second phase, which would go further

04:21than what was applied during Trump's first term, because they started to get a little

04:24nervous, especially when Trump started talking about hitting French wine exports with 200%

04:30tariffs.

04:31They were also a little worried that the commission was going to shoot its shot too early here.

04:34Now that they know the 20% tariffs are going ahead, it would seem logical that that second

04:39phase should go ahead at the end of this month.

04:43President Macron seemed to be suggesting that.

04:45But then we're looking at what can be done further, and that is the services sector,

04:49which incoming German Chancellor Friedrich Merz was referring to.

04:54That is the nuclear option for the EU, because while the EU exports way more goods to the

05:00US than vice versa, the US exports way more services to the EU than vice versa.

05:06Services are difficult to tariff.

05:07They haven't been tariffed before, but there's a new instrument that would allow the EU to

05:11do it.

05:12They've never done it before, but that's what they're considering, and that could majorly

05:15hit US banks, US financial services firm, US tech companies, just basic services, anything

05:22that you can't hold in your hands.

05:24Think of Netflix, for instance.

05:26Europeans are major, major consumers of US services, and those things may be hit with

05:32a tariff.

05:33That's the big question that's, I think, going to be unresolved for a bit here.

05:36The EU is going to be looking at its legal options, economic blowback implications.

05:42They're going to take some time with that decision about the services, but they are

05:45quite seriously looking into it, I'm told.

05:48Thank you very much for this, Dave Keating.

05:51Dave Keating, our Brussels correspondent.

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