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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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.
Leaders across Europe have reacted with concern to the 20 per cent tariff, while pledging to protect their country with subsequent action.
