Can the EU still avert new US tariffs to goods from European companies? And if so, how? Hundreds of thousands of jobs could depend on the answer to this question alone in Germany. So everything is done in Brussels to find the best possible strategy in dealing with US President Donald Trump. An overview of the location:
How is the mood in the EU?
Grim. In the European Commission responsible for EU trade policy, according to Trump’s pay decisions against Mexico, Canada and China, hardly anyone believes that the EU gets away. Especially since Trump on the weekend of tariffs said: “This will definitely happen for the European Union.”
When could the tariffs come?
Originally, the hope in the EU was that one could have time for negotiations by the end of March because only then an investigation commissioned by Trump should be completed on the US trade relationships. However, the latest developments indicate that it should be faster. Trump recently said about tariffs against the EU that there was no schedule, but “pretty soon” would happen.
Is the EU prepared for tariffs?
At an EU top meeting in Brussels, this question was affirmed on Monday. EU diplomats stated that the European Commission prepared possible countermeasures a long time ago. During Trump’s first term, the EU had confidently countered new taxes on steel and aluminum products from Europe on Bourbon Whiskey, Harley-Davidson motorcycles and jeans. How strongly the EU reacts this time should depend on Trump’s concrete decision. Additional tariffs of 10 to 20 percent are kept for likely.
How could it go after the imposition of tariffs?
In a less bad scenario, Trump could quickly be convinced to temporarily suspend the Zolle – and then start negotiations. So it was last also went with Mexico and Canada. In the worst-case scenario there would be a long trade war-with difficult consequences for the economy.
What could be negotiated?
The SPD trading expert and MEP Bernd Lange sees several starting points. In order to reduce the goods deficit criticized by Trump, the EU could therefore import about more liquid gas (LNG), military technology and agricultural goods from the USA. It would also be possible to lower the import tariffs for US cars. At ten percent, these were currently well above the US customs set of 2.5 percent. A new agreement on the expansion of American LNG exports has also brought Commission President Ursula von der Leyen into play.
The former Luxembourg head of government Xavier Bettel, who is now a minister for foreign trade and foreign policy, stabbed on Tuesday at an EU meeting in Warsaw for negotiations and a united EU to Trump. He had worked with him for years as a prime minister, he said. His experience is: “If you are weak, he eats you up. If you don’t negotiate, he does one.”
What disturbs Trump so strongly in the trade in Europe?
Trump wants to strengthen the United States as a production location and reduce the trade deficit with Europe. It is a thorn in the side of the fact that European companies sell significantly more goods in the United States than American companies in the EU.
This affects Germany in particular: According to the Federal Statistical Office, the USA is more important to the local exporters than ever in the past 20 years: According to this, 2023 goods worth 157.9 billion euros were exported to the USA, almost ten percent of Germans were exported to the United States Exports.
Conversely, 2023 were imported from the USA worth 94.7 billion. The result was a German record surplus of around 63 billion euros with the USA, according to the statisticians. With no other country, Germany has had such high export surpluses since 2017.
How does Brussels see the US trade deficit?
The EU Commission relativizes the figures. EU trade commissioner Maroš Šefčovič pointed out on Tuesday after the EU meeting in Warsaw that the EU had a surplus of 154 billion euros in goods trading compared to the US . “This means that the EU’s entire trade surplus compared to the United States is only about three percent of our total trading volume of 1.5 trillion euros – around 50 billion euros,” he said. Almost 5 million jobs on both sides of the Atlantic settled from this “healthy and robust trade relationship” between the EU and the USA.
What would tariffs mean for the economy?
Tille would hit the already battered auto industry in Europe, above all the Germans. For the local economy, which has shrunk for two years in a row and should grow minimally in 2025, tariffs would be a new deep blow. “The sales market USA is very important for Germany’s production site,” says Hildegard Müller, President of the Association of the Automotive Industry (VDA). Around 400,000 cars from German production went to the USA in 2023 – almost a tenth of the annual production. This makes America most important export market for manufacturers.
VW, BMW and Mercedes operate large works in the USA. Nevertheless, in large numbers from Europe. Porsche even serves the US market completely from Europe. That could change through new tariffs. At Porsche and Audi, the “Handelsblatt” should also make business games to manufacture in the USA. And VW recently stopped the planned export of its electric sedan ID.7 from Emden to North America.
The tariffs on Mexico and Canada have been postponed: has the big trade war now blown?
That is unclear. In return, Trump had more efforts to move the tariffs to protect the borders to Canada and Mexico. The tariffs could now come into force a month later or possibly be negotiated. In contrast, additional US tariffs on Chinese imports have been effective since Tuesday. Trump said they were just a prelude. “If we don’t get a deal with China, the tariffs will be very, very substantial.”
How difficult would the consequences be?
In the case of tariffs on Mexico, Canada and China, the Ifo Institute sees all sides as a loser. Canada has to expect an export decline by 28 percent and Mexico by 35 percent in the event of countermeasures on US tariffs. Unlike the geographical neighbors, China, on the other hand, can deflect the trade more easily from the USA, says Lisandra Flach, head of the IFO Center for Foreign Affairs. China therefore sees it in the model calculations with an export decrease of 3.8 percent the slightest affected.
The United States would be a big loser: the IFO estimates that its exports could fall by up to 22 percent in the event of countermeasures. For Trump, a lot is at stake in a trade war.
