EU to push for deal with U.S, to avoid prohibitive tariff

By Philip Blenkinsop

BRUSSELS (Reuters) -European Union ministers agreed on Monday to prioritise negotiations with the United States to avoid threatened 30% tariffs that the EU trade chief said would wreck transatlantic trade.

U.S. President Donald Trump said on Saturday he would impose 30% tariffs on most EU imports from August 1, though diplomats say there is still time to hammer out an agreement to prevent this.

European Trade Commissioner Maros Sefcovic said he had sensed that talks with U.S. counterparts were approaching "a good outcome for both sides" but the new tariff threat had created "a new dynamic".

A 30% tariff rate would make it almost impossible to continue trading as before, with enormous consequences for supply chains and negative impacts on both sides of the Atlantic.

"And therefore I think we have to do, and I will definitely do, everything I can to prevent this super-negative scenario," he told reporters before a meeting of EU ministers to discuss trade.

Despite Trump's letter, Sefcovic said he understood that U.S. negotiators were willing to continue negotiations, though he warned that the EU would need to prepare for all outcomes, including possible countermeasures.

The Commission has proposed suspending the EU's first package of potential tariffs on 21 billion euros ($24.5 billion) worth of U.S. goods. An initial suspension was due to expire by midnight on Monday.

It is also likely to seek the green light on Monday for a second package that would hit 72 billion euros of U.S. goods.

Danish Foreign Minister Lars Lokke Rasmussen agreed that it was too early to impose countermeasures and that he hoped the EU would remain united on that front.

"But we should prepare to be ready to use all the tools," he added. "If you want peace, you have to prepare for war. And I think that's where we are."

French Trade Minister Laurent Saint-Martin said the EU should go beyond what the Commission had outlined to date, saying the bloc should also look at targeting U.S. services or use its wide-ranging "anti-coercion" instrument.

This instrument allows the bloc to retaliate against third countries that put economic pressure on EU members to change their policies.

"This balance of power desired by Donald Trump is a balance of power in which you must demonstrate your ability to fight back. And this is perhaps where we need to accelerate today," Saint-Martin said.

($1 = 0.8559 euros)

(Reporting by Phil Blenkinsop and Milan Strahm, writing by Bart Meijer; Editing by Kirsten Donovan, Bernadette Baum and Gareth Jones)