The European Union (EU) is preparing to respond 'lawfully, proportionally, and decisively' to the tariffs imposed by former U.S. President Donald Trump, although the strongest measures remain 'only as a last resort', according to Bernd Lange, chair of the European Parliament's Committee on International Trade.

Lange stated on Thursday that the U.S. government's actions should not be interpreted as a release from tariffs but rather as increases in inflation that will raise prices for consumers in both the U.S. and the EU, as well as in the Global South, primarily composed of poorer countries.

The EU has faced a 20% tariff on certain U.S. imports, derived from a 39% evaluation by the U.S. against products exported from the EU. Lange argued that the justification provided by the U.S. does not substantiate this rate, pointing to an average of around 5% for EU tariffs, with a more accurate reflection being closer to 1.5% to 2%, taking into account many goods that are exempt from tariffs.

The U.S. rationale cited consumer protection regulations, chemical substance laws, and digital services legislation from the EU, which Lange considered not pertinent for negotiations as they relate to EU consumers only.

Lange explained that discussions are currently taking place regarding the application of coercive measures outlined in a 2023 regulation that grants the EU extensive authority to impose trade and investment sanctions against foreign governments that use trade to coerce other nations into altering their political decisions.

This regulation allows for ten different retaliatory actions against a coercive government, with a particular focus on the services sector.

Potential actions could include taxation of tech companies, revocation of banking licenses and intellectual property rights, and exclusion from public contracts.

This legislation was adopted shortly after China imposed trade restrictions on Lithuania due to its supportive stance towards Taiwan.

Lange indicated that while the EU is considering employing these instruments, they would be used only as a last measure.

The EU's initial actions may target 'illegal' tariffs imposed on steel and aluminum, as well as products like fitness and fishing equipment, which Lange believes do not undermine U.S. interests.

The decision for further actions would depend on assessing the impact of the initial measures, as the EU does not aim to become 'the engine of escalation'.

Lange anticipated that the EU would enhance its trade cooperation with nations adversely affected by the tariffs.

He noted that the U.S. holds a trade surplus in services and emphasized the pivotal role of major tech companies.

The EU does not wish to escalate the situation further but is prepared to consider countermeasures regarding certain digital services.

Under existing legislation regarding digital markets, American tech companies are already under scrutiny, and fines could be levied shortly.

Next week, Lange is scheduled to visit Washington, hoping the EU can avoid tariffs through negotiations, though he expressed limited optimism.

He noted that trade policy is primarily in the hands of the European Commission, while the European Parliament's role chiefly pertains to legislation.

There appears to be a lack of opportunities for constructive negotiations as observed in the recent visits of Maroš Šefčovič, the European Commission's member responsible for trade, to Washington.

Lange described the structure of the U.S. government as 'completely opaque', stating that trade decisions are dictated exclusively by the president and his trade advisor, Peter Navarro, rather than high-ranking officials like the U.S. Trade Representative.

He labeled the situation as 'chaotic', indicating that without the willingness of U.S. officials to engage substantively, meaningful discussions cannot occur, although the EU will continue to attempt these engagements.

He articulated that past experiences during Trump's first administration revealed a pattern where tariffs precede retaliatory tariffs, ultimately leading to negotiations.

Lange noted Trump's intention to foster divisions among EU nations but reiterated that trade remains an exclusive EU competency in response to questions about whether Hungary or Italy might pursue separate discussions.

He highlighted the interconnected nature of supply chains, emphasizing that tariffs impact the automotive industry in Hungary and asserting that no country can be isolated from the effects of such tariffs.