Europe Strikes Back: Facts and Figures on Tariffs Against the US
The European Union (EU) is preparing to respond to the latest round of tariffs imposed by US President Donald Trump on steel, aluminium, cars and other key sectors. The measures have further escalated trade tensions between Washington and Brussels, prompting the EU to consider countermeasures that could significantly affect the dynamics of global trade.
US Tariffs in Review
President Trump has imposed a 25% tariff on steel and aluminium imports, and has also increased tariffs on cars and other goods. The tariffs affect around 70% of EU exports to the US, which were worth $585 billion in 2024. The European Steel Association (EUROFER) has warned that the tariffs pose a serious threat to the future of the European steel industry, which has already lost 9 million tonnes of capacity in 2024 due to a market glut of cheap imports.
EU countermeasures planned
The European Commission has proposed retaliatory tariffs on $28 billion worth of US goods, including bourbon, dental floss, vacuum cleaners and toilet paper. The measures will be implemented in two stages: the first set of tariffs will come into effect on April 15, with additional duties to follow a month later. The EU also plans to cut steel imports by 15% from this month to protect its market from a potential influx of cheap steel diverted from the US.
Sector impact
Iron and ore industry
The European steel sector alone employs more than 300,000 people, but it is struggling with fierce competition from Asia and high energy prices. EUROFER says Trump’s tariffs could lead to a further loss of 1 million tonnes of steel exports to the US, exacerbating an already difficult situation for European producers on global markets.
Automotive Industry
The automotive sector is particularly vulnerable, as exports to the US account for 20% of the EU’s total automotive exports (€56 billion in 2023). Trump’s proposed increase in auto tariffs from 2.5% to 25% would make European cars less competitive in the US, potentially leading to a sharp decline in production. Germany and Italy are expected to face significant declines in gross value added (GVA) of 5.3% and 4.7% respectively.
However, experts predict a revival of the automotive industry in Europe due to rising national patriotism and growing public support for the boycott movement against American goods.
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Pharmaceutical industry
Historically exempt from trade tariffs, the European pharmaceutical industry now faces uncertainty as Trump plans to impose new tariffs. Companies are bracing for financial consequences and disruptions to innovation and investment. The gradual introduction of these tariffs could give firms time to shift production, but could still lead to stagnation in product launches.
Economic impact
The announcement of these tariffs has already shaken global markets. On April 7, European stocks fell 4%, and Germany’s DAX index fell 10% in after-hours trading before recovering slightly. Oil prices also hit their lowest levels since the start of 2020 on fears of a global economic recession. The developments underscore concerns about a potential global trade conflict.
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Political dynamics
Member states are divided on the appropriate response. France advocates a halt to investment in the US, while Ireland calls for a measured approach. Italy has expressed skepticism about the overall response. Despite these differences, the bloc is committed to presenting a united front at upcoming trade ministers’ meetings.
The EU’s retaliatory measures against U.S. tariffs are a critical moment in transatlantic trade relations. With sectors such as steel, automobiles and pharmaceuticals facing significant challenges, the bloc’s countermeasures are aimed not only at protecting its economy but also at pressuring Washington to negotiate. But as global markets react negatively and recession fears grow, both sides risk escalating into a full-scale trade war with far-reaching consequences for consumers and businesses around the world.
