WEBVTT - Valdis Dombrovskis Talks Effect of Tariffs on EU

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. So Donald Trump has

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<v Speaker 1>ordered his administration to consider imposing reciprocal terror some numerous

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<v Speaker 1>trading partners, including of course the European Union. Val the

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<v Speaker 1>Sanmbrowski's European Commissioner for the Economy and Productivity joins US now. Commissioners,

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<v Speaker 1>thanks so much as always for giving us a little

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<v Speaker 1>bit of your busy schedule.

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<v Speaker 2>When you look.

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<v Speaker 1>At what Donald Trump has announced so far in terms

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<v Speaker 1>of terrorists and steel and aluminium, the European Union always said, look,

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<v Speaker 1>we can fight back.

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<v Speaker 2>What would that look like?

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<v Speaker 3>Well, indeed, we are following closely the announcements of Trump

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<v Speaker 3>administration as regards tariffs, and generally speaking, we are obviously disappointed.

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<v Speaker 3>We do not see the basis for those tariffs, neither

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<v Speaker 3>economically nor legally. The EUUs is having the largest trade

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<v Speaker 3>and investment relationship in the world. We have deeply interconnected

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<v Speaker 3>value changed, so all this is going to be quite

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<v Speaker 3>disruptive economically. So we are an engagement is the US

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<v Speaker 3>administration also to find more precisely the plans, to find

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<v Speaker 3>the constructive ways forward. But if necessary, we are ready

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<v Speaker 3>to defend our economic interests and to respond in for

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<v Speaker 3>firm and proportionate waves.

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<v Speaker 1>So first of all, have you run the numbers of

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<v Speaker 1>what that looks like if there were the first wave

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<v Speaker 1>of tariffs, and if there's some reciprocal and backwards and forwards,

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<v Speaker 1>what that does to GDP or just in terms of

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<v Speaker 1>how much that would cost.

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<v Speaker 3>Well, of course it will depends on exact policies which

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<v Speaker 3>are going to be enacted. In a sense, also on

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<v Speaker 3>the US sides, there are still some considerations how these

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<v Speaker 3>reciprocal tariffs are going to be applied. But the EU

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<v Speaker 3>is already having actually one of the largest tariffs in

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<v Speaker 3>the world, one of the lowest tariffs in the world,

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<v Speaker 3>sorry for that, So we do not see the economic

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<v Speaker 3>reasoning for this as well. But obviously all we are

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<v Speaker 3>looking so what our options are And if you remember

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<v Speaker 3>also from the first Trump administration when it imposed the

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<v Speaker 3>tariffs on steel and aluminium, we responded with our tariffs

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<v Speaker 3>in a proportionate way.

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<v Speaker 1>Do you think it would be similar to what happened

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<v Speaker 1>last time or are there new regions of the economy

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<v Speaker 1>that would be worse affected.

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<v Speaker 2>Well, we.

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<v Speaker 3>See that there has been already announcement on steel and aluminium,

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<v Speaker 3>and what is being discussed now with so called recipprosal tariffs.

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<v Speaker 3>It goes beyond it, so it can be broader than

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<v Speaker 3>last time.

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<v Speaker 1>There's also been very little progress on defense spending from

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<v Speaker 1>the EU. What are you expecting jd Events in his

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<v Speaker 1>big speech today to announce and how can Europe step up?

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<v Speaker 3>Well, I think it's very clear also from recent announcements

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<v Speaker 3>from US administrations that EU has to step up its

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<v Speaker 3>defense effort, defense spending, strengthening our own military industry, strengthening

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<v Speaker 3>support for Ukraine because obviously it's key that we achieve

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<v Speaker 3>a piece in Europe and peace in Ukraine that is

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<v Speaker 3>fair and lasting, and that it's not done behind Ukraine's back,

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<v Speaker 3>but with Ukraine at a table. But it's clear that

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<v Speaker 3>we will have to do more as Europeans, and actually

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<v Speaker 3>European Commission is preparing for the next month as a

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<v Speaker 3>white paper on the future of European Defense, where will

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<v Speaker 3>be elaborating exactly on those issues.

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<v Speaker 2>Joined that is this a possibility?

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<v Speaker 3>Well, I will not go now in detail, but it's

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<v Speaker 3>clear that defense spending will need to increase substantially, both

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<v Speaker 3>at national and at EU level.

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<v Speaker 1>Commissioner. Some have floated the idea that the frozen assets.

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<v Speaker 1>The frozen Russian assets could then be spent by Ukraine

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<v Speaker 1>to buy US weapons.

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<v Speaker 2>Is that a good idea?

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<v Speaker 3>Well, we know that right now as a frozen Russian

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<v Speaker 3>assets or immobilized Russian assets are being used, the proceeds

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<v Speaker 3>from those assets are being used for extraordinary Revenue Acceleration

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<v Speaker 3>loan which is provided by G seven to Ukraine in

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<v Speaker 3>a sense to repay that loan. So if there are

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<v Speaker 3>new initiatives being discussed, and obviously we're looking at all

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<v Speaker 3>the possibilities and all the implications because eventually it is

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<v Speaker 3>important that Russia, as an aggressor is paying for the

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<v Speaker 3>damage which is creating in Ukraine.

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<v Speaker 1>But it would it be possible that one day this

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<v Speaker 1>money would be used to buy US weapons to.

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<v Speaker 2>Get us on side.

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<v Speaker 3>Well, that certainly all will require more discussions and engagements

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<v Speaker 3>also with US administrations. But as I said, we are

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<v Speaker 3>assessing different possible options how to move forward. But it's

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<v Speaker 3>worth keeping in mind that right now those assets are

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<v Speaker 3>used as a revenue source for repoyment repayment of this

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<v Speaker 3>external revenues acceleration loan which is being provided for Ukraine.

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<v Speaker 3>So in a sense Russia is already paying in this

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<v Speaker 3>way for a damage it's creating commission.

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<v Speaker 1>Just a very quick final question on regulation. Do you

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<v Speaker 1>think the EU will follow the US in deregulating, in

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<v Speaker 1>regulating less but also getting rid of some of what's.

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<v Speaker 2>In place now.

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<v Speaker 3>Well, we have been very clear from our side that

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<v Speaker 3>we are not in de regulation, so we will not

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<v Speaker 3>launch some kind of regulation race here. With what we

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<v Speaker 3>are doing. We are doing simplification without abolishing our high

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<v Speaker 3>social and environmental standards. We set a numerical target for

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<v Speaker 3>how much ADMINSTERI burden we want to reduce by twenty

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<v Speaker 3>five percent in general and by thirty five percent for SEMIS.

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<v Speaker 3>But we are not, for example, abolishing the goals of

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<v Speaker 3>European Green Deal like carbon neutrality by twenty fifty and

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<v Speaker 3>so on. We're rather looking how we can reach our

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<v Speaker 3>policy goals in a more efficient and less costly manner.

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<v Speaker 2>Thank you so much. Question for joining us as well.

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<v Speaker 1>The Sanbraska's European Commisioner for the Economy and Productivity