For Europe, doubling down on its relationship with China could come at a steep price—including the loss of its storied auto industry.

European Commission President Ursula von der Leyen described U.S. President Donald Trump's universal tariffs as a major blow to the world economy and said the European Union was prepared to respond with countermeasures if talks with Washington failed.

European leaders have said they would prefer to negotiate. If that fails, their response could go beyond anything they’ve tried before.

PARIS (Reuters) - The European Union should not respond to U.S. President Donald Trump's reciprocal tariffs with exactly the same counter-measures as it would impact EU consumers, French Finance Minister Eric Lombard said on Friday.

The European Union is realistic about what near-term deliverables the bloc’s chief trade negotiator, Maros Sefcovic, can attain when he begins talks with his US counterparts on Friday about President Donald Trump’s far-reaching tariffs.

Some Europeans have acknowledged U.S. grievances over trade but wonder whether the Trump administration is serious about finding a middle ground.

"Purchasers of luxury goods are probably not very price-sensitive, so sellers will be able to pass the tariff on to buyers in the form of higher prices," Randall Holcombe, professor of economics at Florida State University,