Donald Trump has imposed sweeping tariffs on all imported foreign goods in a watershed moment for the global economy – as world leaders now decide what steps to take in response to the levies.
Formerly one of the European Union’s most reliable trade partners, Washington has now landed countries within the economic bloc with a 20 per cent tariff on all imports to the US, at the same time a 25 per cent levy on imported cars begins.
On the so-called ‘Liberation Day’, Mr Trump unveiled a list of countries showing the tariffs they charge to the US and the reciprocal tariffs which they will face from this weekend. The EU, which the White House says charges a 39 per cent tariff on US goods, will be hit by a 20 per cent reciprocal tariff.
EU commission chief Ursula von der Leyen has described the move as a “major blow to the world economy”. Other leaders across Europe have also expressed alarm over an emerging trade war.
But how have European leaders reacted and how is Europe expected to retaliate?
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How are EU states impacted?
The US was the EU’s largest export partner in 2024, making up 20.6 per cent of the bloc’s export of goods, according to the union’s official statistics website Eurostat.
Trade between Washington and European countries has grown in the past decade, with EU exports surpassing $500 billion for the first time in 2022 and remaining above that level since.
Germany, by far Europe’s largest exporter to the US in 2024 with €161 billion worth of exports, will be heavily damaged by the tariffs. Ireland, with exports worth €72 billion, and Italy, which exports €65 billion of goods, will also be among the worst hit.
The car sector, which made up more than $45 billion of the EU’s exports to the US, could also face significant damage. It is unclear whether Mr Trump’s new 20 per cent blanket tariffs will be added on top of the 25 per cent tariffs announced earlier in March on the automotive industry.
A combined 45 per cent tariff could lead to a collapse in European car exports to the US, presenting a “major challenge for Germany’s economic”, economist at Capital Economics Daniel Parker told Euronews. The pharmaceutical industry, which is also one of Europe’s main export industries to the US, also faces significant risk.
European stock markets tumbled upon opening on Thursday after tariff announcements.
Shipping giant Maersk, which is often viewed as a gauge for world trade, fell 7.55 per cent. Other big firms with global supply chains, such as German clothing brand Adidas, fell 10.4 per cent according to CNBC.
How have leaders reacted?
Leaders across Europe have reacted with concern to the 20 per cent tariff, while pledging to protect their country with subsequent action.
“President Trump’s announcement of universal tariffs on the whole world, including the EU, is a major blow to the world economy,” Ms von der Leyen said after the announcement.
“Uncertainty will spiral and trigger the rise of further protectionism. The consequences will be dire for millions of people around the globe.”
She said the EU would issue countermeasures in response to tariffs on steel, and will prepare further action if further negotiations are not fruitful.
German finance minister Joerg Kukies called for a “strong response by the European Union”. He said: “It would be naïve to think that if we just sit there and let this happen, things will get better.”
Spanish prime minister Pedro Sanchez said Spain will “protect its companies and workers”, Irish prime minister Micheal Martin described the move as “deeply regrettable”, and Italian leader Giorgia Meloni said a trade war would “inevitably weaken the West”.
How could they retaliate?
The EU has was already finalising a first package of countermeasure in response to earlier-announced 25 per cent tariffs on imported steel and aluminium. Earlier this week, Ms von der Leyen said Brussels had a “strong plan to retaliate” which it would use if necessary.
Experts believe Brussels will likely impose levies on more symbolic US goods. After Mr Trump’s steel and aluminium tariffs were unveiled, the EU said it would levy up to €26bn of goods from the US, including Harley-Davidson motorbikes and bourbon.
The bloc could also strike Washington’s economic interests, targeting American banks and tech companies such as Meta with raised taxes – or prevent them from bidding for European government contracts.
German politicians said on Thursday morning that the tariff could lead to new alliances, such as with Canada and Mexico
There have also been recent moves by the EU to limit US manufacturers in weapons tenders. This week, it was reported that US Secretary of State Marco Rubio warned states against excluding US companies from contracts.
The exact nature of Europe’s response is yet to be seen, but Brussels has indicated that it will be significant.
