The European Union (EU) has announced retaliatory trade measures against the United States, levying new tariffs on a range of US industrial and agricultural products in response to the recent increase in US tariffs on steel and aluminium imports to 25%. This swift action underscores the already strained relations between the two economic powerhouses, exacerbated by previous US warnings about Europe needing to handle its own security.
The EU’s countermeasures will affect approximately €26 billion ($45 billion) worth of US goods, extending beyond steel and aluminium to include textiles, home appliances, and various agricultural products. Items such as motorcycles, bourbon, peanut butter, and denim will be targeted, reflecting similar retaliations from the Trump administration’s earlier tariffs.
European Commission President Ursula von der Leyen articulated that the EU is committed to remaining open to negotiations. However, she highlighted that the tariffs aim to pressure specific sectors in the US, notably those in Republican-stronghold states, while still affecting blue states like Illinois, which is a significant soybean producer. They are concerned that these tariffs will disrupt both US and EU economies, raising prices and endangering jobs.
The retaliatory tariffs also include concerns for US spirits exporters, who are considered collateral damage in this trade tussle. The Distilled Spirits Council expressed disappointment, noting that the EU is a vital market for US whiskey, where exports have significantly increased post-suspension of earlier tariffs.
Trump’s administration had previously initiated similar tariffs against EU steel and aluminium, which had drawn widespread criticism and prompted retaliatory actions from the EU during his term. The current situation involves a phased approach: on April 1, the EU will reinstate “rebalancing measures” previously imposed and then introduce additional tariffs targeting €18 billion ($31 billion) in US exports.
During a recent trip to Washington, EU Trade Commissioner Maroš Šefčovič attempted to mitigate the situation but was met with a lack of cooperation. He emphasised the need for collaborative effort to avoid unnecessary burdens from tariffs.
The European steel sector is bracing for potential losses, with estimates suggesting that the EU might lose up to 3.3 million tonnes of steel exports as the US represents a significant share of EU steel sales. Overall, the trade volume between the EU and US stands near $1.5 trillion annually, indicating a substantial economic relationship that both sides stand to jeopardise.
As discussions continue, the American Chamber of Commerce to the EU has urged for urgent negotiations to prevent further economic harm to both economies as tensions remain high amidst escalating tariffs.