UPDATE: EU Will Impose 'Countermeasures' Against Trump Tariffs

Published Feb 11, 2025, 9:59 AM

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On today's podcast:

(1) The European Union says it will respond to any tariffs the US might impose on it. The warning comes after President Trump pushed forward with his pledge to place a 25% tariff on all US steel and aluminium imports.

(2) Despite Trump's insistence that there would be 'zero exemptions'. The US President says he will "give consideration" to a carve-out for Australia. Those comments were also echoed by the country's Prime Minister Anthony Albanese, after a call between the two leaders.

(3) The growing prospect of a trade war comes as the the UK's new ambassador to the US -- Peter Mandelson -- says it's important for allies to respect Trump's electoral mandate.

(4) A group of investors led by Elon Musk has offered to buy the nonprofit that controls OpenAI for $97.4 billion, escalating a clash between the Tesla chief executive and the artificial intelligence company he co-founded.

(5) A Bank of England voting member who backed an outsized interest rate cut last week sees companies struggling to raise prices as consumers pull back on spending.

(6) Europe is teetering on the edge of its next energy crisis after natural gas prices soared to the highest in two years.

Bloomberg Audio Studios, podcasts, radio news. They say's the Bloomberg Daybreak Europe podcast, available every morning on Apple, Spotify or wherever you listen. It's Tuesday, the eleventh of February in London. I'm Stephen Carroll.

And I'm Lizzie Burden. Coming up today.

The EU says it will respond to Trump's tariff plan on steel and aluminium with countermeasures.

Ahead of the EU's warning shot, Donald Trump warns that tariff right may go higher than twenty five percent.

Plus wait and see.

BP pledges to lay out plans for a strategy reset as results underwhelm.

Let's start with the round up of our top stories.

The European Union says it will respond to any tariffs the US might impose on it. The warning comes after President Trump pushed forward with his pledge to place a twenty five percent tariff on all US steel and aluminium imputs. The US Administration says the broad tariffs will go into effect on the twelfth of March, referring directly to the proposal of Metal Tariff's Europea Commission President Ursula Vonderlayon said that if imposed on the EU, they would quote trigger firm and proportionate countermeasures.

The EU response comes after Trump insisted that the proposed tariffs on steel and aluminium imports would help boost domestic production and bring more jobs to the United States.

Protecting are still at aluminum industries is a must. And today I am simplifying our tariffs and CEO and aluminum so that everyone can understand exactly what it means. It's twenty five percent without exceptions or exemptions, and that's all countries, no matter where it comes from, all countries. If made in the United States, however, there is no tariff for zero.

Trump's move comes on top of new ten percent tariffs on goods from China and twenty five percent levies on Canada and Mexico that are currently paused for one month. The latest measures are meant to crack down on what White House officials said were efforts by countries like Russia and China to circumvent existing duties.

Despite Trump's insistence that there would be zero exemptions, the US president says he will give consideration to a carve up for Australia. Those comments were also echoed by the country's Prime minister after a call between the two leaders.

I presented Australia's case for an exemption, and we agreed on wording to say publicly, which is that the US President agreed that an exemption was under consideration in the interests of both of our countries.

Anthony Albanezi there, who has been under intense political pressure to secure tariff exemptions for the country's steel and aluminium exports to the US. Both leaders cited the US trade surplus with Australia was a key reason for any carve out.

The growing prospect of a trade war comes as the UK's new ambassador to the United States, Peter Mandelson, says it's important for allies to respect Trump's electoral mandate. The comments come after Trump suggested last week the UK may avoid tariffs, saying the relationship can be worked out. Here's what Lord Mandelson told the BBC on his first day in the role.

We've got to take all these issues as they can. Realize that the president has a very strong and clear mandate for change in the United States. Now that doesn't mean to say that we're going to agree in Britain with every single detail of what he does, but we have to respect and understand what drives him, what is mandate is to do and how his allies need to adjust sometimes.

Peter Mandilson also told the BBC that has passed criticisms of Trump were quote ill judged and wrong. In twenty nineteen, the labor politician reportedly called the US leader a danger to the world.

In one interview to Turnings Now.

BP has pledged to deliver major changes to its strategy as it reported results that will likely add to pressure on the oil major. Adjusted net income for the fourth quarter was one point one seven billion dollars, which is down from around three billion last year and a miss of the average analist estimate of one point three billion dollars.

The Bloomerg Salmonstead says investors.

Will need to wait for details of what the CEO has dubbed a reset.

If you are hoping that today's BP results would have something to do with exactly what they're going to do with their strategy, what kind of changes they're going to make, I'm afraid you might be a touch disappointed because they are saving all of that until the twenty sixth of February. There is a line in the report saying that we are going to have a kind of fundamental reset of our strategy. That is broadly what everyone kind of already expects, and it's a question of whether that fundamental reset is going to meet what say Elliott and other shareholders want some.

Understood there talking to us after Bloomberg learned that activist investor Elliott had built a significant holding in BP.

Open Ai CEO Sam Altman has rejected a ninety seven point four billion dollar bid by an Elon Musk led group in a post Unmosqus x platform Atmann said no, thank you, instead offering to buy the social media company for a tenth of that price. Bloomberg Intelligence analyst Man Deep Saying says Musk's bid was unexpected.

Everyone is fixated on, you know, lowering the costs, so our view is there will be more consolidation. But I didn't anticipate this form of consolidation where you end up seeing a hostile bid, you know where. Clearly, I think, given Microsoft's stake in open Ai, there's no way you could see a.

Deal like this, Bloomberg Intelligence is man Deep saying, reacting to that news, which was first reported by the Wall Street Journal. Musk and Altman have been locked in a long standing feud over the direction of open Ai. The two man works together as founders, but animosity grew as the chat GBT creator moved towards becoming a for profit business.

Those are you top stories this morning?

On the markets, we have the stock six hundred flat to the upside smp E, many futures are down a quarter of eight percent, and head of Pal's testimony later, the US tenure treasure yield is hire a basis point at four point five percent.

Well, in a moment, we'll bring you more on how the EU was planning to respond to those latest steel and aluminium tarifs in the United States.

But Lizzia just wants to mention the.

Story that I've been reading this morning on the Bloomberg terminal, and this is the new list of Michelin Stars restaurants in the UK.

And Ireland in Hungary for this conversation.

I mean, there's some good names on there, so we've got more haul in Lancashire that's got its third star. And our food editor Cake Crater has been writing about some of the dishes you might have there. For example, Local Dorset seek a Deer on the menu there sounds very tempting good and Ramsey's restaurant kept its three stars. He's just opened a new restaurant here in the city as well.

Twelve seats, Yeah.

What are you going to do with twelve seats?

You're suggesting you have to fill them all?

Yeah, you need more than twelve seats.

Nah, exclusivity, So we are paying for quiet luxury.

Look, it's a great list to read some of them.

Nice to see the likes of oman Borough Market getting its first star as well, twenty two restaurants getting a new star across Britain and Ireland as well. A couple of great Irish names and there as well, Lignum and Galway on the Marrison Room and Carton House in Kildare get their first stars. A plenty to inspire you in that piece. You can read more on Bloomberg dot com and on the terminal.

Well, let's get back to the latest on the tariff news and the European Union says that it will impose countermeasures against the latest US tariffs on steel and aluminium. We have our Brussels bureau chief Kevin Whitelaw with US now and from Berlin, our correspondent Oliver Crook and our markets reporter Valerie Title with US in studio, so all bases covered here, Kevin, I want to start with you. This is in response to the US tariffs on steel and aluminium. What exactly has the EU said?

You know, the EU has said in the sort of tersiest way possible that this is it views this as unlawful and will impose countermeasures if if it stands. They're trying to avoid specifics and they are trying to leave room for negotiation. These tariffs don't take effect until March twelfth, which does give the EU, but every other country in the world at least some thing a medical time to have conversations with the Trump administration to see if there is something they're looking for that that could either lower or of the tariff threat.

We know that the EU has been preparing for the potential of tariffs being imposed. What do we know about what has been prepared for? What are the likely next steps we could see the EU taking.

Well, yeah, the you had been prepared to you know, detailed list of you know, potential retaliations, but it was also based off everything from across the board tariffs on all goods, which is one thing that Trump had floated at one point to obviously more specific issues. When it comes to the metals a luminum steel, this revives a fight from the first administration, and so when when when the Trump administration did tariffs on these medals the first time round, there were a set of retaliation, retaliatory measures that you took on things like you know, Harley Davidson motorcycles, Levi Jean's Kentucky Bourbon that could all come back, or it could be slightly different, or it could be a different set of things. So the EU has a couple of different options. But the truths that have been called under the Biden administration over this trade fight was due to expire at the end of March, so the you know, this fight was going to come back one way or another. Probably I think Trump has just made it come back faster.

Ollie all of Schultz has also been speaking about this this morning. What's he been saying.

I mean, listen, what we heard from Schultz is basically the usual stuff that we've been hearing from many of the European leaders, basically saying how harmful this is going to be, not just to the Europeans but also to the Americans. How basically that you will have to respond in kind but their option, that's not their preferred option to have a trade war, and that this is that they hope that they can fix the sort of misguided path of terists and that can still be sort of avoided. I think that the main question for everybody from the Europeans, you know, in Brussels or Berlin, it's basically what does Trump want?

Right?

What is the negotiation? Is this just going to be a pure negotiation. Is it just about closing the sort of trade gap. Is it going to be bigger than that? And I think that's going to be the main question. Is it going to be potentially about regulation, anti trust? Could it be about NATO spending, Could it be I mean, maybe Greenland. These are all going to be sort of the questions and trying to get an understanding of what this administration is thinking. The good news for the Europeans is that they're going to have their first basically high level contact with the Trump administration later this week in Munich, where.

You have JD.

Vance, you have Marco Rubio, you have Keith Kellogg, the chief Envoy for Ukraine and Russia that will be coming to Munich and to Germany and we'll be meeting with some of these leaders for the very first time.

Oliver, how exposed is Germany's economy, in particular within the European Union to these tariffs on stealing aluminium?

Yeah, so listen, whenever we talk about trade with the United States and the issues that it provokes for Europe, any issue it provokes for Europe is mainly an issue for Germany. So basically, the EU had a trade surplus with the United States of about two hundred and thirty billion dollars last year. If you look at just the surplus between Germany and the United States, it was more than seventy billion euros and that was a record last year. Right, And the total trade between Germany and the US is about a quarter trillion euros. So this is basically a tariff that really hits the Germans the hardest. But you know, this stuff flows both ways. I mean, I'll give you just one example. Mercedes Benz for example, Right, they have factories in Europe. Obviously they have factories in the United States, but many of the SUVs they sell in Europe which are being produced and assembled over in the United States. So of course a lot of the exports are going from Europe to the United States, but they go both ways. When you talk specifically about steel. You know, Germany's the seventh biggest exporter of steel into the United States, is about three billion dollars last year, so listen, in the scheme of things, it's not the sort of biggest category. But again it's another headwind for a German economy not in need of headwinds.

So, Valerie, where are we seeing this showing up in the market if.

Anywere look, the reaction is fairly muted here, Lizzie. There is some trade the downside in basic resources here in Europe, those exposed to the perhaps the metal trade, the aluminum and steal tariffs that tit for tat, But we're not really seeing a risk off move in the equity market. The eurostox six hundred is still whole holding up pretty well. S ANDP Future didn't really react, and then finally in the FX market, the reaction there hasn't been anything eye catching. Euro is still unchanged and there wasn't really.

A jump in gold.

So it seems like the market is reading through this for now, perhaps thinking that the ball is now in Trump's court. We know that he might announce reciprocal tariffs either today or tomorrow. Perhaps the market is just waiting for that announcement before drawing any conclusions from the EU's move today.

Yeah, it is very interesting to see that that sort of muted market reaction again. And this is sort of in line with what we've had since we had these tires first mooted by Trump. On Sunday evening as well. The EUS Trade Commissioner Mao Chefcovic has been speaking in the European Parliament in Strasbourg this morning.

Let's take a listen to what he had to say.

We will always protect our interest from unjustified measures in.

Line with our values.

And this time has come and we are currently assessing the scope of the measures and overnight overnight and we'll be responding in firm and a proportionate way by countermeasures. We will act to safeguard our economic interests. We will protect our workers, businesses and consumers.

That's Marschefsovitz. They're the executive Vice President of the European Union. Let's go back to our Russels we or Chief Kevin Whitelaw, Kevin the Hope or at least some countries in response to these tariffs, would they be able to carve out an exception or an exemption from them. We know that the Australian Prime Minister has already had a conversation with Donald Trump about it. What hopes will there be on the EU side that there is room to negotiate here without things getting Dare I say it out of hand?

Well, obviously, I think you know, the EU has taken a certain amount of solace and in the notion that some of Trump's early tariff measures did result in negotiated truces or delays, and so I do think that they are optimistic, and I think that it does actually explain the sort of measured nature of the statement. Basically, they didn't threaten specifics, they didn't take an old really harsh tone, but they did make clear that like they're going to have to do something. So that's something is obviously going to depend a lot on how these conversations are going forward. But I think everyone who's dealing with this administration has to understand that the risk of continually getting into negotiations is that you just end up with a series of concessants that simply delays something without actually providing countries about with any certainty that they've actually escaped, you know, the entire cycle of this, and we're going to watch that. With Canada Mexico they only got a thirty day truce and in that first tariff threat from from from the from the Trump administration. So you know, if if if he just comes back and wants more, that's going to you know, the EU and others may have to take a different lesson from that.

Welly, can we just talk about how this is going to play into the domestic politics in Germany? What might it do to change the election campaign in Germany.

Or just impact on the election campaign in Germany. From the Trump camp has probably been Elon Musk and his sort of getting involved in backing the AfD and having these of strange outbursts and sort of participating very kind of actively as an advocate for the alternative for Deutsche Line, the far right group that wants to leave the Eurozone, that wants as much more protectionists and much more sort of nationalist, and all of it sort of and all of its sort of messaging in terms of what it will actually mean for the economy. Again, this is going to be absolutely huge sort of mood music if this stuff moves forwards. I mean, again, it's a big if, and there's no way around the fact that again, what Germany is staring down is a sort of couple of years of a coalition that has been very sort of clumsy, didn't get along. Obviously, it resulted in the government collapsing. We are now looking at potentially a third year of contraction in Germany that has literally never happened, three years of consecutive contraption since the fall of the Berlin Wall. The only possible silver lining, I think politically for Germany is that actually things get so bad that these political parties need to make really difficult compromises and really do something in order to turn the economy around, to stimulate the economy, and really think much more radically about what they need to do to turn the economy around. Maybe for the CDU and the Conservatives that means look at the debt break and thinking about other and more creative ways to simulate the economy. Potentially for the SPD it means cutting back some of the social welfare things. These have all been sort of chronic sticking points that have basically made it impossible for things to move forward politically, and potentially you know, Trump changes that potentially, though also it doesn't, and it just sort of slowly the economy sort of limps on and things get worse and worse and worse.

Kevin, the EU is of course that it's based a trade block, so the response comes from Brussels. But could we see a situation where certain European countries will be trying to negotiate side deals or exemptions for products that would particularly affect them.

Is there is there a European unity question here?

I mean there definitely is, maybe less so on the metals tariffs than on sort of some of the bigger across the board conversations that are going down. But yes, there's a definite concern that that countries will have an incentive to to try to cut their own deals. And there is also some worry that Trump actually want that and may want to look to fracture the market, you know, the single market in European unity. So he may well start offering that. So you know, obviously that could happen with his closest allies, such as Hungary's Victor orbon Or, it could happen with individual economies and leaders who are who are worried about the impact, you know, particularly when you look at how many of Europe's economies are indeed struggling right now.

So well, the back and forth has begun between the US and the EU. Well, the key points that markets are watching for now as this plays.

Out, Well, look, Lizzie, if we go from just the one sided US announcing tariffs to a tit for tat trade war, that will really turn this trade from an FX trade to an equity market trade. Right We're not necessarily worried about dollar strength or euro weakness. If we do get combative tariffs from either side of the Atlantic, the risk really is going to show up in equity market sentiment souring and perhaps a further bid into gold.

Okay, Faleriy ty Tyler, market supporter, thank you very much. Just a final question to Oliver Crook in Berlin. Of course we're talking about the impact on the election campaign here as well. Frederick Martz from the CDU is currently the leading candidate in the polls to be the next chancellor. There should we expect any divergence on this issue between Olof Schultz and Frederick Martz.

I mean, listen, I think that the only sort of positive thing potentially if the Olaf Schultz gets replaced is just the fact that we know that there's a great disdain on the Trump side of things for Schultz. You know, in Germany we've had obviously, again most of that has been through Elon Musk through Twitter basically calling you know, Elon calling Olof Schultze a fool and being very very critical of the German government. I mean, listen, I don't know that Frederick Mertz is the sort of most dynamic, charismatic, sort of deal cutting kind of person that you know that Trump would like to work with. I think he tries to style himself as someone who could be who's closer politically as a conservative. But again, what I think what was interesting and he was stressing over the weekend in the debate of Frederick Mertz, that is, is despite the fact that again there was all this controversy about him voting with the AfD on this question of immigration, and the AfD is obviously a very anti immigration party, very anti europe party, Frederick Mertz is still very pro European. He's saying that basically, the only way that we're going to be able to stand up to the United States is if we work together as a block, and to sort of Kevin's point what we were talking about, there is of course always the fear that this can draw fragmentation within the European Union because in moments of economic and sort of political instability, many people tend to go towards a nationalist sort of view. But I think there is a consciousness, certainly from the CDU, that the only way that Europe, that Jermy is going to make it out of this is in sort of solidarity with Europe.

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