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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.