EU raises stakes by aiming levies at GOP heartland

good on the president’s threat.

Paul Ryan, Republican speaker of the House of Representatives, comes from the same state — Wisconsin — where motorcycle maker Harley-Davidson Inc. is based. Earlier this week, Ryan said he was “extremely worried about the consequences of a trade war” and urged Trump to drop his tariff proposal.

Other U.S. politicians will also feel the pressure. Bourbon whiskey hails from Senate Majority Leader Mitch McConnell’s home state of Kentucky. San Franciscobased jeans maker Levi Strauss is headquartered in House Minority Leader Nancy Pelosi’s district.

The EU has expressed growing concerns about Trump’s protectionist stance on trade, and steel has political importance to the bloc, which was born out of the European Coal and Steel Community in the 1950s. The industry also continues to have economic clout, generating annual sales of around 170-billion euros, accounting for more than one per cent of EU gross domestic product and directly providing more than 300,000 jobs.

The European retaliatory list targets imports from the U.S. of shirts, jeans, cosmetics, other consumer goods, motorcycles and pleasure boats worth around onebillion euros; orange juice, bourbon whiskey, corn and other agricultural products totalling 951-million euros; and steel and other industrial products valued at 854-million euros. The Brussels-based commission, the EU’s executive arm, discussed the retaliatory measures with representatives of the bloc’s governments at a meeting on Monday evening.

Europe may expand the group of targeted American goods should Trump also follow through on a related pledge to impose a 10 per cent duty on foreign aluminum. The list obtained by Bloomberg on Tuesday relates only to steel countermeasures.

“These tariffs right now are just talk, but they have the potential to become quite inflammatory and impact economic growth,” Kristina Hooper, chief global market strategist at Invesco, said in an interview with Bloomberg Television. “Tariffs beget more tariffs. It’s like putting bacteria in a petri dish.”

Trump’s vow to curb U.S. imports of foreign steel and aluminum has sparked opposition within his Republican Party and is based on a national-security argument that the EU dismisses. The White House threat risks provoking retaliation across the globe and a slew of complaints to the World Trade Organization, which has never ruled on a dispute involving trade restrictions justified on national-security grounds.

European Commission President Jean-Claude Juncker and his leadership team will discuss the retaliatory options on Wednesday. The commission is also weighing filing a complaint to the WTO against the U.S. and introducing “safeguard” measures to prevent steel shipments from other parts of the world to America from being diverted to the European market and flooding it.

The tariffs included in draft list discussed on Monday can be imposed without waiting for WTO disputesettlement procedures, according to the European Commission’s briefing to EU government envoys. They are retaliatory measures worth 50 per cent of the EU’s exports of steel which will be hurt by Trump’s plan, and hence can be imposed immediately, according to the commission.