Exclusive: EU may target $3.5 billion of U.S. imports for trade retaliation - sources

By Philip Blenkinsop

BRUSSELS (Reuters) - The European Union is considering applying 25 percent tariffs on around $3.5 billion of imports from the United States if President Donald Trump carries out his plan to apply global duties to steel and aluminium, EU sources say.

The European Commission has said it would respond "firmly" to proposed U.S. import duties of 25 percent on steel and 10 percent on aluminium.

It has spelt out it would join others in a challenge at the World Trade Organization (WTO) and consider safeguard measures, last deployed in 2002, to guard against steel and aluminium being diverted to Europe from elsewhere if U.S. tariffs come in.

A further counter-measure under consideration would specifically target the United States to "rebalance" trade between the two, EU sources say.

The U.S. tariffs would be officially brought in on grounds of national security, but the European Union says U.S. military requirements represent no more than 3 percent of U.S. production and that the measures are really a form of protectionism for U.S. manufacturers.

EU exports of steel to the United States in 2017 were worth 5.3 billion euros ($6.53 billion) and of aluminium 1.1 billion euros.

For certain grades of steel, the United States cannot show there was any increase of imports last year, the EU sources say, meaning it would not be allowed to apply safeguard measures to them. For the EU, exports of those grades amounted to 2.8 billion euros ($3.5 billion).

Assuming U.S. tariffs fully covered EU steel, the European Union would put forward 25 percent tariffs on 2.8 billion euros worth of goods from the United States.

About a third would be steel grades, another third other industrial products and a final third agricultural products.

The list of products is set to be presented next week to EU countries, whose approval would be needed.

The "rebalancing" would have to take place within three months.

($1 = 0.8118 euros)

(Reporting by Philip Blenkinsop; editing by Robert-Jan Bartunek)