“If there is a need to defend Europe’s economic interests, we are ready to do so,” Valdis Dombrovskis said when asked about the threat by Trump — who stopped short of announcing immediate new tariffs on US trading partners.

Dombrovskis noted that the EU had responded — “in a proportionate way” — to tariffs on EU steel and aluminium during Trump’s first administration in 2017-2021, by targeting US imports such as Harley-Davidson motorbikes and Bourbon.

Before taking office this time around, Trump made sweeping threats of tariffs including against the United States’ largest trading partner the EU, its neighbours Canada and Mexico and its strategic rival China.

Faced with the looming threat, the EU’s strategy has for months been to advocate EU-US cooperation rather than confrontation.

“The EU and US are strategic allies, and we need to work together, especially in this turbulent geopolitical context,” Dombrovskis reiterated, warning that a trade conflict would carry “substantial economic cost for everyone, including for US”.

He also warned the EU must “work on the resilience of our economy”, including by seeking to diversify its trading partnerships.

The EU announced a strengthened trade deal with Mexico just ahead of Trump’s inauguration, and on Monday it announced it was resuming talks towards a free trade deal with Malaysia. (AFP)