Trump’s tariff announcements and the threat of an impending global trade war not only have significant impacts on North America and China but could have major consequences for the European Union as well. On February 1, Trump signed three executive orders placing severe tariffs on Canada, Mexico, and China– with tariffs of 25% on all Canadian and Mexican goods and tariffs of 10% on Chinese goods. On February 3, he announced that these tariffs would be paused for 30 days, but will be going forward. He announced the next day that tariffs on the EU would “definitely happen.” The EU has begun to brace itself for a looming trade war, which EU diplomats believe could arrive at any moment.
Although Trump did not indicate a timeline for said European tariffs, he claimed they would happen soon, as, according to him, the European Union has treated the United States “so terribly”, and been “an atrocity” on trade. According to Trump, Europe has taken advantage of the United States and has greatly harmed the country by not buying more American products. According to Aurelien Saussay, Assistant Professorial Research Fellow at the Grantham Research Institute on Climate Change and the Environment, although a trade deficit does exist between the US and the EU, Trump’s description of the imbalance is unfair and not backed by evidence. A trade deficit between the United States and the European Union indicates that American consumers prefer European options for various products, and find domestic products less desirable.
Experts say tariffs would lower EU exports, strain public budgets, raise unemployment rates, and slow EU GDP growth. Although Trump aims to use the tariffs as a bargaining chip to pressure manufacturers and importers to produce goods domestically, ordinary consumers will ultimately pay the price. Researchers believe that US tariffs could risk a spike in domestic inflation. According to French central bank governor Francois Villeroy de Galhau, “everybody loses” in this type of trade war.
The EU hopes for cooperation but is ready to act in a united response if and when Trump does impose tariffs. The European Commission says the bloc “regrets” Trump’s choice to impose tariffs on Canada, Mexico, and China. Currently, his plans have been put on hold until March. While many EU leaders have attempted to remind the Trump administration of the value of EU-US trade, there is now broad agreement that the EU will have to retaliate with the same measures if subjected to tariffs. French President Emmanuel Macron said the EU will stand up for itself and respond firmly to Trump’s threats. As stated by European Commission President Ursula von der Leyen,
“unjustified tariffs on the EU will not go unanswered—they will trigger firm and proportionate countermeasures.
The EU is preparing to act swiftly to enact counter-tariffs if needed, drawing up lists of US imports to target, according to Robert Basedow, associate professor for international political economy at the European Institute of the London School of Economics and Political Science.
However, von der Leyen has repeatedly stated her preference for negotiation over confrontation and hopes that the situation won’t call for this type of retaliation. As stated by Jean-Luc Demarty, the head of the Commission’s trade department during Trump’s first term,
“With a personality like Trump, if we don’t react, he’ll trample us.” For now, the EU is waiting to see Trump’s next move before acting, wanting to avoid adding fuel to the fire.
Edited by Olivia Moore
