EU must keep 'nerves of steel' in talks with U.S. on tariffs, Costa says

By Sergio Goncalves

LISBON (Reuters) -The European Union must keep a constructive position with the U.S. on trade tariffs to avoid an unwanted trade war, EU Council President Antonio Costa said on Monday.

Ahead of a G7 meeting in Canada, where trade issues should be discussed, Costa said if the EU was subject to discriminatory measures it would have to respond and the "European Commission is prepared to respond, particularly in trade matters".

"We have to keep nerves of steel. I have great hope that, in the end, some line of rationality will guide political action... as no tariff will increase U.S. exports of goods or services to Europe," he said in a videotaped chat with former EU Commission President Jose Manuel Durao Barroso that was shown at a conference in Lisbon.

U.S. President Donald Trump backed away from his threat to impose 50% tariffs on imports from the European Union next month, restoring a July 9 deadline to allow for talks between Washington and the 27-nation bloc to produce a deal.

"The European Commission made the most generous proposal it could: zero tariffs," Costa said.

"We basically want to avoid a trade war with the U.S.," Costa said, adding that Europe wanted to engage in "constructive dialogue".

The EU's total exports to the United States last year totalled about 500 billion euros ($566 billion), led by Germany (161 billion euros), Ireland (72 billion euros) and Italy (65 billion euros). Pharmaceuticals, cars and auto parts, chemicals and aircraft were among the largest exports, according to EU data.

(Reporting by Sergio Goncalves; editing by Inti Landauro and Alex Richardson)