Brussels develops a two-step trade strategy to deal with Donald Trump if he assumes a second term as president. The goal is to offer the Republican a quick trade deal and, if necessary, take targeted retaliatory measures against punitive tariffs.

EU officials see this approach as the best response to Trump's promise to introduce a minimum tariff of 10 percent. They estimate that this could reduce EU exports by around 150 billion euros annually.

Lead negotiators plan to contact the Trump team before his inauguration in November to discuss which US products the EU could purchase in larger quantities. Should negotiations fail and Trump introduce higher tariffs, the trade department of the European Commission is preparing lists of imports that could be subject to tariffs of 50 percent or more.

We must show that we are a partner for the USA, not a problem," said a senior EU official. "We seek agreements, but we are ready to defend ourselves if necessary. We do not let fear guide us.

Trump's First Term from 2017 to 2021 Was Painful for the EU, Which Has a Significant Trade Surplus with the USA. After Trump Imposed Tariffs on Imports of Steel and Aluminum from the EU and Other Countries in 2018 for National Security Reasons, the EU Responded with Retaliatory Tariffs Worth 2.8 Billion Euros.

In designing the measures, Brussels targeted Trump's core electorate by imposing high tariffs on bourbon whiskey, Harley-Davidson motorcycles, and motorboats. These tariffs are suspended until March as part of a preliminary agreement with the Biden administration to suspend metal tariffs.

EU Trade Commissioner Valdis Dombrovskis expressed hope to the Financial Times that both sides could avoid a repeat of past "confrontations." "We believe that the US and the EU are strategic allies, and it is particularly important in the current geopolitical context that we cooperate in trade," he said.

He added, however: "We have defended our interests with tariffs and are ready to defend our interests again if necessary.

The Latvian called for a "cooperative approach" and said Brussels is open to "targeted agreements" to reduce the 156 billion euro trade deficit in goods.

During Trump's first term, Brussels initially reached an agreement on lobsters, a staple food in Maine, a state Trump hoped to win in 2020. The EU reduced tariffs on imports of live and frozen lobster products from the USA and for all other countries without trade agreements, in accordance with global trade rules. In return, the USA halved tariffs on a range of goods, including crystal glassware and lighters.

Further agreements followed regarding beef and soybeans to appease Trump's voters in the Midwest. Nevertheless, the annual US trade deficit expanded to 152 billion euros in 2020, compared to 114 billion euros in 2016, when Trump won the election.

Since Russia's large-scale invasion of Ukraine in 2022, the EU has been importing large quantities of liquefied natural gas to replace supplies from Moscow. The US deficit remained stable under President Joe Biden, reaching 156 billion euros in 2023.

However, EU officials warn that it will be difficult to significantly increase US exports as they tend to be less valuable than those of the EU. Raw materials dominate, while leading EU exports are pharmaceuticals, cars, and expensive food and beverages like champagne.

The EU economy is also growing at less than half the rate of the US economy, dampening demand.

Jan Hatzius, Chief Economist of Goldman Sachs, recently predicted that a tariff war would harm the EU more than the USA. It would cost 1 percent of the EU's GDP, compared with 0.5 percent of the USA's. However, it would also increase the inflation rate in the USA by 1.1 percent, compared with 0.1 percent in the EU.

The Brussels politicians hope that Trump does not want to fuel inflation when voters are concerned about the cost of living. But the senior official said, "Whatever happens this time, we are better prepared.