The European Union, the US’s largest trading partner, vowed to retaliate after President Donald Trump announced sweeping tariffs against the bloc in his bid to dismantle the global trading system.

Trump, speaking from the White House on Wednesday, announced a 20% tariff on EU imports, which will take effect April 9. He repeated his assertion that the 27 member states “rip us off” and called it “pathetic.” He unveiled different duties for certain countries, including a rate well above 50% for China.

“President Trump’s announcement is a major blow to the world economy,” European Commission President Ursula von der Leyen said in a video address Thursday. “We’re preparing for further countermeasures to protect our interests and businesses if negotiations fail.”

Trump’s so-called reciprocal tariffs are meant to target all the trade barriers US exports face abroad, such as duties, domestic regulations and taxes. Von der Leyen has previously said the EU “holds a lot of cards,” including retaliatory tariffs and targeting American services and technology companies.

The American measures threaten to wipe out much of the euro-area expansion the European Central Bank forecasts for this year and next. The impact on inflation is less clear-cut, which has kept ECB officials from committing to any outcome of their next policy meeting on April 17.

The latest US measures come after Trump announced a 25% import tariff on steel and aluminum as well as on cars and some auto parts. The EU announced a set of countermeasures of up to €26 billion ($28.1 billion) in response to the metals duties, which are expected to enter into force in mid-April. Trump has said he’ll announced other sectoral duties on products including lumber, pharmaceutical goods and semiconductors.

What Bloomberg Economics Says...

“The EU will try to negotiate a deal to at least reduce the amount of US tariffs. Short of a deal, it will continue retaliating against Washington.”

—Jamie Rush and Antonio Barroso. To read the full note, click here

Trump has threatened to impose a 200% tariff on European wine, champagne and other alcoholic beverages if the EU moves forward with a levy on American whiskey exports currently due on April 14.

France and other countries have called on the commission, which handles trade matters for the EU, to consider deploying the bloc’s anti-coercion instrument — the EU’s most powerful trade tool, designed to strike back against nations that use trade and economic measures coercively, Bloomberg reported earlier.

The so-called ACI has never been deployed before and could lead to restrictions on trade and services as well as certain intellectual property rights, foreign direct investment and access to public procurement.

EU trade ministers are due to meet on April 7 to discuss the US measures and the EU’s response.

Von der Leyen has promised a firm and proportionate response to the tariffs but has also indicated that the EU would prefer to avoid a confrontation and find a negotiated solution in the coming weeks.

Speaking after the president’s announcement, his Treasury secretary urged other countries not to fight back. “I wouldn’t try to retaliate,” Scott Bessent told Bloomberg Television. “As long as you don’t retaliate, this is the high end of the number.”

The commission is working on a “term sheet” of possible concessions it could make to the US to help reach a settlement to remove or reduce the duties. The term sheet would set out areas for negotiations on tariffs, mutual investments with the US as well as easing certain regulations and standards, Bloomberg reported earlier.

The EU’s trade chief, Maros Sefcovic, traveled to Washington last week to discuss trade matters with US Commerce Secretary Howard Lutnick, US Trade Representative Jamieson Greer and Director of the National Economic Council Kevin Hassett. He wasn’t successful in heading off the new tariffs but they began to map out the contours of a potential deal to reduce the duties, Bloomberg reported.

Non-tariff issues such as the value-added tax, digital taxes and several EU regulations and food standards featured prominently during the talks in Washington. The EU says its VAT is a fair, non-discriminatory tax that applies equally to domestic and imported goods.

The Trump administration has focused its attacks on what it considers to be unfair barriers to American products that the US believes contribute to a transatlantic imbalance favoring Europe. The EU also raised the possibility of additional liquefied natural gas and defense-related purchases.

European officials have stressed that even though the EU has a goods trade surplus with the US, the 27-nation bloc imports a lot of American services ranging from ecommerce and social media sites to Internet search engines — all part of the US’s Big Tech industry that has recently cozied up to Trump and his circle of advisers. EU and US firms have more than €5 trillion ($5.4 trillion) worth of investment in each other’s markets, according to the commission.

Germany is most heavily exposed to Trump’s actions due to its €92 billion trade surplus in goods with the US in 2024, according to Eurostat. Its flagship car industry is particularly in focus, compounding the sector’s struggle with a worsening position in China and the transition to electric vehicles.

The trade setback will dampen expectations of a quick rebound from two years of contraction just as chancellor-in-waiting Friedrich Merz prepares to ramp up spending on defense and infrastructure to get the economy back on track.