Euro zone bond yields edged higher on Tuesday, as traders weighed the possible impact of President Donald Trump's latest tariffs and focused on upcoming testimony from Federal Reserve Chair Jerome Powell and U.S. inflation data due on Wednesday.

The European Union said on Tuesday it would respond with "firm and proportionate countermeasures" after Trump's decision to impose tariffs on all steel and aluminium imports, escalating fears of a trade war.

Germany's 10-year yield, the benchmark for the euro zone, was last up 4 basis points at 2.405%,. It has stayed largely range-bound over the last week.

Mohit Kumar, chief financial economist Europe at Jefferies, said the market was becoming more desensitised to tariff news.

"Overall, the market thinking is that yes it is noise, it induces volatility, but medium-term it doesn't have a huge amount of impact," said Kumar.

Powell will deliver his semiannual testimony on monetary policy before the Senate Banking, Housing and Urban Affairs Committee later on Tuesday.

With so much focus on the outlook for U.S. interest rates, traders will be looking for any hints on how flexible the Fed might be on policy, and they will be eyeing the January consumer price inflation data due on Wednesday for further clues.

Germany's two-year bond yield, more sensitive to ECB rate expectations, was up 3 basis points at 2.048%.

Italy's 10-year yield rose 5 bps to 3.501%, and the spread between Italian and German yields stood at 108.9 bps.

Lyn Graham-Taylor, senior fixed income strategist at Rabobank, said limited movement in spreads, a flat opening for equities, and a flattening of the euro inflation swap curve on higher oil prices were all among the factors contributing to higher yields on Tuesday.

"Taking all this together, and bearing in mind that the move in Bunds is greater than that in USTs, the sell-off in Bunds this morning may well be linked to chunky issuance (including Italy, the EU, Germany and the Netherlands all coming to the market)," he said.

U.S. 10-year Treasury yields were last up 3 bps at 4.5211%.

Investors will also be scouring remarks from European Central Bank board member Isabel Schnabel when she takes part in a panel discussion at an event in Germany later on Tuesday.

Looking further ahead, Jefferies' Kumar said the near-term catalysts for the European market included Germany's federal election due on Feb. 23 and the possibility of Chinese economic stimulus in March.

(Reporting by Lucy Raitano; Editing by Amanda Cooper and Gareth Jones)