Media: EU braces for trade war as Trump threatens new tariffs

The European Union is preparing to retaliate against potential tariffs of 10 per cent or more on its exports to the United States, following threats from US President Donald Trump. European leaders have vowed to hit back decisively, targeting industries that will have the greatest impact.

However, despite the tough rhetoric from Brussels, the bloc faces an uphill battle in this escalating trade dispute, Caliber.Az reports via The Spectator.

With 25 per cent levies already imposed on Canada and Mexico and 10 per cent on China, Europe appears to be the next target in a renewed wave of protectionist policies. German Chancellor Olaf Scholz has asserted that the EU remains a "strong economic area and has its own courses of action," while France’s Industry Minister Marc Ferracci has called for a "biting" response.

During Trump’s first term, the EU strategically imposed tariffs on American products such as bourbon and motorbikes, and a similar approach is expected this time.

Nevertheless, the EU finds itself in a precarious position. As a self-proclaimed trade and regulatory superpower, it prides itself on its ability to defend its economic interests. However, economic realities suggest that the EU may struggle to sustain a prolonged trade conflict with the US. The bloc currently runs a significant trade surplus with the US, amounting to €158 billion annually. Any escalation would likely result in greater economic losses for Europe than for the US.

Furthermore, the EU’s economic growth is already fragile. High taxation and stringent regulations have stifled its economic dynamism, with the eurozone experiencing stagnation and even the possibility of recession.

Exports to the US have been one of the few sources of economic strength, and a disruption to this trade flow could exacerbate existing economic difficulties. Unlike the US, which can absorb temporary economic shocks, the EU has limited flexibility to sustain prolonged losses.

Internal divisions within the EU could also weaken its response. While European leaders may initially present a united front, key industries and individual member states may seek alternative strategies.

Major corporations such as Volkswagen and Siemens may choose to shift production to the US to mitigate losses, while countries like Poland and Hungary could attempt to negotiate separate trade agreements with Washington. Such fractures could quickly erode the EU’s negotiating position.

Although Trump’s broader tariff strategy has drawn criticism—particularly regarding levies on Canada and Mexico—his concerns about the EU’s trade practices are not without merit. The EU has long been accused of maintaining protective barriers while benefiting from access to the American market.

Rather than engaging in a costly trade war, analysts suggest that the EU may be better served by pursuing negotiations to address these imbalances.

By Aghakazim Guliyev