[Source: Reuters]

The European Commission said on Monday it had offered a “zero-for-zero” tariff deal to avert a trade war with U.S. President Donald Trump as EU ministers agreed to prioritise negotiations, while striking back with 25% tariffs on some U.S. imports.

The 27-nation bloc faces 25% import tariffs on steel and aluminium and cars and broader tariffs of 20% from Wednesday for almost all other goods under Trump’s policy to hit countries he says impose high barriers to U.S. imports.

On Monday evening, the Commission proposed its first retaliatory tariffs at 25% on a range of U.S. imports in response to Trump’s steel and aluminium tariffs rather than the broader levies.

However, the list was shortened after the EU executive bowed to pressure from member states and removed bourbon, wine and dairy after Trump threatened a 200% counter-tariff on EU alcoholic drinks. France and Italy, major exporters of wine and spirits, were particularly concerned.

EU trade chief Maros Sefcovic said earlier on Monday the retaliation would impact less than the previously announced 26 billion euros ($28.4 billion). The tariffs for most of the goods will go into effect May 16 and some from December 1.

Ministers overseeing trade met in Luxembourg on Monday to debate the EU’s response and discuss relations with China. Many said the priority was to launch negotiations to remove Trump’s tariffs, rather than fight them.

Michal Baranowski, deputy economy minister of Poland, told a press conference after the meeting that his EU counterparts did not want to be “trigger-happy”.

Sefcovic said discussions with Washington were at an early stage and that he had offered “zero-for-zero” tariffs for cars and other industrial products, expressing hope that discussions could begin.

However, Trump’s top trade adviser on Monday dismissed tech-billionaire Elon Musk’s push for “zero tariffs” between the U.S. and Europe, calling the Tesla CEO a “car assembler” reliant on parts from other countries.

“While the EU remains open to – and strongly prefers – negotiation, we will not wait endlessly,” Sefcovic said, adding the bloc would push ahead with countermeasures and steps to avoid floods of diverted imports.

The EU is set to approve the first retaliatory measures this week. The bloc will start collecting the tariffs on April 15, with a second tranche starting a month later.

The removal of bourbon from the list of items subject to the EU’s retaliatory tariffs on U.S. imports “would be great news, and we are hopeful this is the case,” said Chris Swonger, chief executive of the Distilled Spirits Council of the United States.

“It would be the first step toward getting the U.S.-EU spirits sectors back to zero-for-zero tariffs and untangling distilled spirits products from these wider trade disputes.”

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