According to media reports, following U.S. President Donald Trump's announcements of 25% import tariffs on steel, aluminum, automobiles, and auto parts, the U.S. unveiled a global reciprocal tariff policy on April 2, which includes a 20% reciprocal tariff rate targeting the European Union (EU).
EU officials stated that approximately €290 billion worth of EU exports will be subject to the U.S.'s 20% base tariff, translating to an additional €58 billion in tariff costs. The automotive sector will be the hardest hit, as the 25% import tariff imposed by the U.S. on EU automobiles will affect goods worth around €66 billion. In addition, the 25% tariffs on steel and aluminum will impact another €26 billion worth of EU metal exports.
European Commission President Ursula von der Leyen strongly criticized Trump's tariff policies, urging the U.S. to shift from confrontation to negotiation. However, should talks with the White House fail, the EU is prepared to respond immediately. Beyond the initial countermeasures against U.S. steel tariffs, the EU is ready to implement further retaliatory actions.
Last month, following the U.S. steel tariff announcement, the EU imposed 15%-25% tariffs on €26 billion worth of U.S. goods, including steel and aluminum products, agricultural goods (such as bourbon and peanut butter), textiles, and home appliances. The tariffs cover over 2,000 product categories and are expected to take effect around mid-April.
In response to the 25% U.S. tariff on imported cars, the EU has launched a second phase of countermeasures, planning to impose a 30% retaliatory tariff on SUVs and pickup trucks sold in the EU by American automakers such as General Motors and Ford. If enacted, this could lead to a 12% decline in U.S. auto sales in the EU, resulting in losses exceeding €4 billion.
Additionally, the EU may target major U.S. tech companies. Carsten Brzeski, Head of Global Macro at ING, suggested possible actions including stricter regulation, using the EU's Anti-Coercion Instrument (ACI) to delay business licenses, restricting access to public contracts, limiting intellectual property rights, or even banning U.S. investment in the EU. Potential target sectors include app stores, smartphones, and cloud services.
Given the EU's limited number of domestic tech giants, it remains heavily reliant on products and services from Apple, Google, Amazon, Meta, Microsoft, Intel, and LinkedIn. EU data shows the U.S. has a €109 billion trade surplus with the EU in the services sector. Targeting U.S. digital services is considered a "nuclear option" in the EU's trade policy toolkit.
French President Emmanuel Macron has urged European firms to pause investments in the U.S., while the French government is also exploring measures to counter U.S. tech firms. Meanwhile, outgoing German Vice Chancellor Robert Habeck has suggested that the EU form an alliance with Mexico and Canada to jointly oppose U.S. tariffs.
Spain fears a 14% drop in exports to the U.S., particularly in machinery and electrical equipment. Spanish Prime Minister Pedro Sanchez has announced a €14.1 billion response plan to support business financing and explore alternative markets beyond the U.S.
The European Commission President emphasized that the EU has many tools at its disposal-from trade to technology and market size-when crafting its response. Nevertheless, both Europe and the U.S. have much at stake in this escalating trade dispute. EU data indicates that the U.S. was Europe's largest goods customer in 2024, purchasing everything from pharmaceuticals and automobiles to alcoholic beverages and telecom equipment. At the same time, U.S. statistics show that the EU was the largest source of American goods imports last year.
