European luxury goods makers say they could draw on pricing power to offset the cost of any tariffs imposed by U.S. President Donald Trump, but analysts say some brands may have limited room to hike prices.

European leaders said they would respond firmly to higher levies on steel and aluminum, but they had yet to say what that retaliation would look like.

The European Union’s executive branch has vowed to “take firm and immediate action” against U.S. President Donald Trump’s imposition of tariffs on steel and aluminum.

The trade threats could reduce exports to the United States and dampen investment in Europe, dealing a blow to growth at a time when the continent is already facing a lackluster economy.

The European Union can negotiate on reciprocal tariffs with the United States but will not give up its right to regulate in areas such as taxation and digital platforms, the chair of the European Parliament's trade committee said on Friday.

European Commission President Ursula von der Leyen said during the Munich security conference Friday the European Union will respond if the United States imposes reciprocal tariffs.