The European Union threatened on Wednesday to impose duties on U.S. bourbon, peanut butter, cranberries and orange juice if President Donald Trump imposes tariffs on steel and aluminum.
EU Trade Commissioner Cecilia Malmstrom also said Brussels would take the case to the World Trade Organization and coordinate with other trade partners against the proposed U.S. tariffs.
She confirmed that the EU has prepared a provisional list of U.S. products that would see higher tariffs in Europe if Trump moves ahead with the tariffs. According to media reports, the EU's tariffs could amount to 2.83 billion euros ($3.52 billion).
"Certain types of bourbon is indeed on the list as is other items, such as peanut butter and cranberries, orange juice, etc.," she said, adding that "very soon" the list will be made public.
In an interview Wednesday on CNBC, U.S. Commerce Secretary Wilbur Ross played down the impact of the tariffs. "We're not trying to blow up the world," he said.
Malmstrom said the EU was getting ready to put safeguard measures in place to prevent metal flooding in the EU, as a result of the tariffs.
"There are indications that President Trump, very soon, in the coming days, we don't know for sure, may sign off a decision on import tariffs of 25 percent on steel and 10 percent on aluminum, which he announced on the March 1," Malmstrom said.
"This is done under something that's called Section 232, which refers to internal or national security. We have serious doubts about that justification, we cannot see how the European Union's friends and allies in NATO can be a threat to national security in the U.S. We find that assumption deeply unjust," she added.
In the eyes of the EU, "the motivation of the U.S. is an economic safeguard measure in disguise, not [a] national security measure," Malmstrom added. "That means the EU is entitled to make use of a WTO safeguard agreement to rebalance benefits that we have given to the U.S. in the past."
Trump said on Thursday that the U.S. would be imposing a 25 percent tariff on steel imports and 10 percent on aluminum, insisting such imports are a threat to national security. The announcement, which has received some criticism from within the president's party, has raised concerns all over the globe over a potential trade war.
The European Union is the first trade partner to present specific steps if Trump moves ahead with steel and aluminum charges. However, Canada has vowed to come up with its own countermeasures. Mexico, China and Brazil have also said they are considering steps to retaliate.
Regarding a trade war, Malmstrom said "we should be very careful with that word."
"It is very hard to speculate what will happen [in the U.S.]. ... I truly hope this will not happen," she said about the U.S. tariffs, arguing that trade wars would not be anybody's interest.
Last weekend, European Commission President Jean-Claude Juncker said Europe needed to take measures as a response to Trump's tariff threat. "This cannot be a unilateral trans-Atlantic action by the Americans," he said. At the time, he mentioned possible taxes on Harley-Davidson, bourbon and Levi's.
However, UBS analysts argued that Trump's intention to impose tariffs on metals is unlikely to have a major impact in Europe. They said Wednesday in a note that "the share of steel and, more so, aluminum in overall euro zone exports is small."
"Steel accounts for 1.4 percent of euro zone exports to the U.S. … equivalent to 0.2 percent of total euro zone exports. … Aluminum accounts for 0.1 percent or less of total exports to the U.S. across the large euro zone countries," the bank said. "So the direct economic impact of the tariffs on the euro zone should be small and concentrated in the respective sectors."
However, Trump has also mentioned that there could be new tariffs on European cars if the EU retaliates against tariffs on metals.
"Compared to steel and aluminum, exports of automobiles to the U.S. are meaningful," the UBS analysts said, arguing that an escalation of words and actions between both sides of the Atlantic could have repercussions on their economies.
According to Barclays, a full-blown trade war is not a baseline outlook but a "possibility worth monitoring."
"Most at risk from an escalation are Asian economies, particularly those deeply intertwined in global value chains," analysts at the bank said in a note on Wednesday.