What happens if the U.S. imposes extra tariffs on EU products? European Parliament published a summary of the potential consequences of a trade war, the importance of EU-U.S. trade relations, and possible EU responses.
TARIFFS THREAT
EU-U.S. trade relations have been a key focus since former U.S. President Donald Trump expressed concerns over the trade deficit and EU regulatory actions against U.S. tech firms. The introduction of tariffs has heightened tensions.
ALUMINIUM AND STEEL TARIFFS
From March 12, Trump imposed a 25% tariff on aluminium and steel imports, significantly impacting EU businesses. The EU has vowed to respond with “firm and proportionate” countermeasures.
IMPORTANCE OF EU-US TRADE
Trade between the EU and the U.S. is vital, with both regions serving as each other’s major trading partners.
EU-U.S. TRADE BALANCE (2023)
|
Category |
EU Surplus/Deficit |
|
Goods |
+€157 billion |
|
Services |
-€109 billion |
|
Total Trade Flow |
€1.6 trillion |
|
Overall EU Surplus |
€48 billion (3% of total trade flow) |
Key Trade Facts:
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The U.S. is the EU’s largest export market for goods and the second-largest for imports.
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The EU is the U.S.’s second-largest export market for goods and its biggest for imports.
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The U.S. is the EU’s largest services trade partner, while the EU is the U.S.’s top export and import market for services.
HOW TARIFFS COULD AFFECT EUROPE
Key Consequences:
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Higher Costs & Reduced Sales: EU products hit with U.S. tariffs would become more expensive, reducing demand.
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EU Counter-Tariffs: Retaliatory tariffs would make U.S. products more expensive for EU consumers.
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Market Disruptions: Countries affected by U.S. tariffs may redirect exports to the EU, increasing competition for EU businesses.
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Supply Chain Disruptions: Higher tariffs could impact EU firms relying on U.S. suppliers.
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Investment Uncertainty: Companies may delay investments due to trade instability.
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New Trade Partnerships: Tariffs could encourage countries to strengthen ties with the EU.
How The EU Could Respond
The EU’s response strategy includes negotiation, legal action, and countermeasures.
Potential EU Actions
|
Response |
Description |
|
Negotiation |
The EU prefers diplomatic solutions to avoid a trade war. |
|
Counter-Tariffs |
The EU may impose retaliatory tariffs on U.S. goods. |
|
WTO Complaint |
If tariffs violate international trade rules, the EU could seek reparations. |
|
Anti-Coercion Measures |
The EU’s legal framework allows countermeasures against unfair trade restrictions. |
EU Leadership’s Response:
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European Commission President Ursula von der Leyen: “The EU will act to safeguard its economic interests.”
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European Trade Commissioner Maroš Šefčovič: “Tariffs are bad for businesses and consumers. The U.S. would be taxing its own citizens and fueling inflation.”
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European Parliament Trade Committee Chair Bernd Lange: “Newton’s law applies here: for every action, there is a reaction.”
WHAT PARLIAMENT IS CALLING FOR
Following Trump’s re-election in November 2024, MEPs debated the future of EU-U.S. relations.
Parliament’s Stance on Tariff Threats:
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Adam Szłapka (Polish Minister for European Affairs): “Open, rules-based trade is a force for good.”
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Sophie Wilmès (Vice-Chair, EU-US Relations Delegation): “Europe is capable of resisting, retaliating, and protecting key sectors.”
The EU-U.S. trade relationship is deeply interconnected. If the U.S. imposes tariffs, the EU will explore negotiation first but is prepared to take countermeasures if necessary. The outcome of these trade tensions will shape the future of global trade and economic stability.
