The European Union Commission has just announced it will will impose countermeasures against U.S. tariffs starting April 15, 2025. This escalation follows U.S. President Trump’s 10% minimum tariff on most imports and a 20% rate on EU goods, as noted by Ursula von der Leyen on April 3. The move risks disrupting the $1.7 trillion U.S.-EU trade relationship and intensifying the global trade war, especially amid U.S.-China tensions.
The U.S. and EU share the world’s largest bilateral trade partnership, with goods and services trade hitting €1.6 trillion in 2023, per the European Commission. The EU holds a €157 billion goods surplus, while the U.S. leads in services. This interdependence supports millions of jobs—2.3 million in the U.S. from EU exports alone, according to the Peterson Institute for International Economics (PIIE). However, the U.S.’s 20% tariff on EU imports, including 25% on steel and aluminum, has been deemed “unjustified” by the EU. The EU’s €26 billion ($28 billion) countermeasures target U.S. goods, aiming to match the U.S.’s $28 billion in tariffs.
These measures will likely raise costs for U.S. exports like soybeans and whiskey, reducing their competitiveness in Europe and threatening American jobs. Conversely, EU exports such as German cars and machinery will become pricier in the U.S., potentially slashing demand and impacting EU industries. The PIIE’s G-Cubed model predicts higher inflation and lower GDP growth in both regions, with the EU facing a more lasting economic hit. Energy security is also at risk, as the EU relies on U.S. natural gas imports, especially post-Russia-Ukraine conflict. Tariffs could spike energy prices in Europe, particularly with winter looming.
This U.S.-EU clash compounds the global trade war, as the U.S. simultaneously targets China. On the same day, Kevin O’Leary proposed 400% tariffs on Chinese goods, reflecting the U.S.’s aggressive stance. China has retaliated with 34% tariffs on U.S. goods, per Reuters, unsettling global markets. The EU’s actions now create a multi-front conflict for the U.S., with allies like India and Japan staying diplomatic for now, as noted by X user CryptoRomulus. This risks isolating the U.S. economically, while the EU might pivot toward partners like China to counter U.S. protectionism, potentially realigning global trade blocs.
Economically, the PIIE suggests U.S. tariffs may narrow the EU trade deficit but won’t address the broader U.S. global deficit, instead fueling inflation. The EU could see a larger global surplus from a weaker euro, though at the cost of domestic growth. Politically, this strains transatlantic ties, undermining cooperation on issues like climate and security via the EU-US Trade and Technology Council.
