EU response to US tariffs could spark ‘one-upsmanship:’ Bettel

Luxembourg: The EU response to US metal tariffs risks triggering a spiral of “one-upsmanship” that could endanger Europe’s and the world’s economic recovery, Luxembourg Prime Minister Xavier Bettel warned.

In an interview with AFP, Bettel said the European Union is nonethless “forced to react” as it prepares a raft of retaliatory tariffs for as early as July, including on whiskey and motorcycles.

“We are in a situation where we are in the process of one-upsmanship, which is not good,” said the premier of the tiny grand duchy nestled between France, Belgium and Germany.

“Nobody will benefit from weakening the other’s economy,” said Bettel, a European liberal who embraces free-market economic ideas.

“We have an economy that is taking off again in Europe and on the globasl scale.

“We have all the same a crisis from 2008 which left a lot of damage. Predictability on the international level would be very important,” he said.

Yet, Bettel said, “Luxembourg is not at all against” the decision taken by the European Commission, the EU’s executive arm, to hit back with its own tariffs.

“Currently, we have no choice: We are forced to react,” he said, adding it should be done proportionately.

Fearing Washington will then hit back with another proportionate step, he added: “I would like rather to be on the path of de-escalation than on the path of escalation.”

From blue jeans to motorbikes and whiskey, the EU’s hit-list of products targeted for tariffs with the US reads like a catalogue of emblematic American exports.

– Wait-and-see on Italy –

The EU originally drew up the list in March but pledged not to activate it unless US President Donald Trump followed through on his threat to impose 25 percent tariffs on steel imports and 10 percent on aluminium.

The Trump tariffs came into effect on June 1 and the EU now joins Mexico and Canada and other close allies that have announced their own wave of counter-duties against Washington.

The EU commission must now take their proposal to be signed off by Luxembourg and the other 27 member states amid divisions over what path to take against Trump’s unpredictable policies.

On another front, Bettel warned that a French-led EU push to heavily tax US internet giants and other digital firms could prompt them to move out of the bloc.

“It is completely unacceptable for companies not to pay taxes,” Macron said.

But he said “will have gained nothing” if the EU taxes firms in the bloc only to see them “relocate” to non-EU Switzerland or London, after Britain leaves the bloc.

Bettel took a wait-and-see attitude toward the new populist-right-wing coalition government in Rome when asked if it could undermine EU financial stability.

“I’m waiting to find out what the programme of the Italian parties is. But if it goes against the values that I defend on the European level, I will say it.”

© Agence France-Presse