President Trump Announces a 25% Tariff on European Union

President Donald Trump has recently escalated his trade policy by imposing or threatening tariffs on the European Union, following actions against Canada, Mexico, and China. He has announced a 25% tariff on steel and aluminum imports from all countries, including the EU, reversing previous exemptions.

Additionally, Trump has vowed to impose broader “reciprocal tariffs” on EU goods, arguing that the EU has long taken advantage of the U.S. through unfair trade practices, such as its $235.6 billion goods trade deficit with the U.S. in 2024. He’s specifically criticized the EU’s 10% tariff on U.S. cars (versus the U.S.’s 2.5% on EU cars) and its reluctance to import more American farm products and vehicles.

The EU, led by figures like Ursula von der Leyen and Emmanuel Macron, has promised a “firm and proportionate” response, signaling potential countermeasures like those seen in 2018—targeting U.S. exports such as bourbon, motorcycles, and jeans. Germany, a major steel exporter, and Ireland, heavily reliant on U.S. trade, could be hit hard, though the UK’s post-Brexit status might spare it from the worst, with Trump hinting at a possible deal with PM Keir Starmer.

Economists warn that these tariffs could raise U.S. consumer prices, stoke inflation, and slow global growth—potentially shaving 0.5-0.9% off EU GDP if a 10% across-the-board tariff sticks. The EU is bracing for a trade war but hopes to negotiate, perhaps by boosting U.S. energy imports or coordinating on China’s steel overproduction. Still, Trump’s unpredictable approach keeps the situation tense.

The European Union is gearing up for a strategic response to Trump’s tariffs, drawing from past experience and current economic realities as of February 26, 2025.

Here’s how they’re likely to counter:

First, the EU is preparing targeted retaliatory tariffs, a playbook they’ve used before. In 2018, when Trump hit EU steel and aluminum with tariffs, the EU fired back with duties on $3.2 billion worth of U.S. goods—think Harley-Davidson motorcycles, Levi’s jeans, and Kentucky bourbon. This time, they’re eyeing a broader list, potentially hitting U.S. exports like agricultural products (soybeans, corn), tech goods, and energy exports (LNG). The goal? Painful enough to sway U.S. business lobbies and voters in key states, but “proportionate” to avoid all-out escalation.

Second, they’re exploring negotiation leverage. The EU could dangle increased purchases of U.S. liquefied natural gas—already up since Russia’s Ukraine invasion cut European energy options—or offer to align more closely on curbing China’s steel dumping, a shared gripe. Macron and von der Leyen have signaled openness to talks, hoping to trade concessions for tariff relief. They might also push a “Buy European” campaign to shift reliance away from U.S. imports, though that’s slower to bite.

Third, the EU’s flexing its regulatory muscle. They could tighten scrutiny on U.S. tech giants—think Google, Apple, or Amazon—with antitrust fines or data rules under the Digital Markets Act, indirectly pressuring Trump’s base. There’s also talk of carbon border taxes hitting U.S. goods if America doesn’t play ball on climate goals, though that’s riskier given global backlash potential.

Internally, the EU’s shoring up its own. Subsidies for steelmakers like Germany’s Salzgitter AG or France’s ArcelorMittal could blunt tariff damage, while trade deals with Asia or Latin America might offset U.S. market losses. Ireland, exposed with 13% of its exports to the U.S., might push for EU-wide relief funds

Germany wants to protect its car exports, France its farmers, and smaller nations fear collateral damage. Economists peg a 10% U.S. tariff costing the EU up to 0.9% GDP, so the bloc’s weighing pain versus principle. Expect a mix of retaliation and olive branches, calibrated to Trump’s next move.