EU-US Trade War Escalates as Trump Imposes Massive Tariffs Threatening Global Economic Stability in 2025
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EU-US Trade War Escalates as Trump Imposes Massive Tariffs Threatening Global Economic Stability in 2025
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Earlier this spring, President Trump announced a sweeping new tariff regime aimed directly at countries the administration says have maintained “harmful” nonreciprocal trade arrangements. Effective April 5, a flat 10% tariff began applying to all countries, with a promise of even higher country-specific tariffs for those with which the U.S. runs large trade deficits. The EU was at the top of that list. According to a White House fact sheet issued on April 2, the President invoked emergency powers to declare that these tariffs would remain until the U.S. trade deficit and nonreciprocal trade treatment are resolved.
By April 9, country-specific tariffs took effect, with the U.S. setting a new 20% tariff rate on most EU goods—a sharp jump from the previous baseline. This applies even to items otherwise covered by a free trade agreement, except for those under the USMCA. The 20% rate was presented as a starting point, with the possibility of lowering tariffs if the EU removed what the U.S. considers unfair barriers.
But the situation did not stay static. In early June, President Trump further escalated trade pressure by raising Section 232 tariffs on EU steel and aluminum imports from 25% to 50%, effective June 4. The aim, according to the White House, is to counter what the administration calls unfair trade practices and to protect the U.S. industrial base. This increase came with a warning: stricter import reporting, and harsh penalties for attempted evasion.
Meanwhile, the announced plan for a much broader tariff hike—a proposed 50% tariff on nearly half of all EU exports to the United States—has been delayed until July 9. S&P Global Market Intelligence notes that this delay signals a limited window for negotiations, but the threat alone is dampening business sentiment and growth prospects across Europe. The pause also holds the EU’s countertariff package in abeyance, a package consisting of €21 billion in tariffs on U.S. goods, and a possible additional €95 billion targeting specific U.S. sectors like aviation and whiskey.
European Commission President Ursula von der Leyen has called for negotiations, emphasizing that tariffs should not be the first or last resort. Still, both sides are preparing for the possibility that talks may fail. The EU is finalizing countermeasures, especially focused on industries hit hardest, such as steel, wine, and vehicles.
Today, as trade tensions linger, the average effective U.S. tariff rate on imports from the EU has already risen to nearly 32%, up from under 12% a year ago. With the U.S. accounting for nearly 20% of total extra-EU exports, these tariffs represent a significant risk to European economic growth, especially as businesses await clarity on whether the 50% “reciprocal” tariff will actually take effect in July.
Thank you for tuning in to European Union Tariff News and Tracker. Don’t forget to subscribe wherever you get your podcasts. This has been a Quiet Please production, for more check out quiet please dot ai.
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