EU eyes targeted countermeasures against Trump’s tariffs, focusing on Republican states, tech firms

The European Union is preparing to respond to US President Donald Trump’s sweeping tariffs by targeting Republican-led states and tech companies closely aligned with the President, Austria’s Economy Minister Wolfgang Hattmannsdorfer said.

Speaking at a press conference, Hattmannsdorfer emphasized that these measures should serve as leverage to bring the US back to the negotiating table, Caliber.Az reports via foreign media.

"We have to hit Republican states and we have to hit Donald Trump's friends, the tech companies," he stated, adding that the EU will also need to discuss digital taxation and regulation in its response.

The announcement of Trump’s aggressive tariffs has already rattled European markets. On April 3, European shares hit a two-month low, with bank stocks suffering the brunt of concerns over the potential economic fallout. The pan-European STOXX 600 index dropped 1.5 per cent, with German stocks, particularly those with heavy exposure to the US, leading the losses, as the country’s biggest trading partner is the US.

Meanwhile, Wall Street futures tumbled 3.1 per cent, as investors fled riskier assets, seeking refuge in safe-haven bonds and gold. The tariffs, which include a 10 per cent levy on most US imports, effectively raise tariffs on European goods to 20 per cent and on Chinese goods to 54 per cent. Both Europe and China have vowed to implement countermeasures in retaliation.

The EU’s response is being shaped by growing concerns about the broader impact on economic growth. “It opens the probability for [the European Central Bank] to cut interest rates even faster in order to provide a little bit of boost with regard to sentiment,” said Emmanuel Makonga, European Equity Strategy at Barclays Investment Bank.

In the aftermath of Trump’s tariff announcements, European financial markets have shown heightened volatility. The bank-heavy indexes in Italy and Spain saw declines, while sectors like luxury goods and sportswear also took a hit, with companies like Adidas and Puma falling sharply. Despite these challenges, defensive sectors such as utilities, food, and beverages posted minor gains.

Barclays strategists warned that while US goods exporters represent just 12 per cent of STOXX 600 revenues, the second-order effects of a weakened global economy could dampen EU earnings growth this year.

By Vafa Guliyeva