US-EU tariff clash puts trillions of dollars in business at risk, AmCham EU warns

The ongoing tariff dispute between the U.S. and the European Union could jeopardize transatlantic business valued at $9.5 trillion annually, according to a warning issued by the American Chamber of Commerce to the EU (AmCham EU).

In its annual Transatlantic Economy report, AmCham EU highlighted the deepening ties between the two regions, noting that trade in goods and services hit a record $2 trillion in 2024. The report projects 2025 as a year of both promise and peril for the world’s largest commercial relationship, Caliber.Az reports, citing Reuters.

Recent developments have heightened tensions, with Washington imposing new tariffs on steel and aluminum, while the EU has outlined plans for retaliation. President Donald Trump has also threatened to impose 200% tariffs on EU wine and spirits, underscoring his concerns about the U.S. goods trade deficit with the EU. However, in the services sector, the U.S. maintains a surplus, and Trump has repeatedly urged manufacturers to produce domestically.

AmCham emphasized that trade is only a fraction of the transatlantic commercial landscape, pointing to the far larger role of investment flows. "Contrary to conventional wisdom, most U.S. and European investments flow to each other, rather than to lower-cost emerging markets," the report stated. U.S. foreign affiliate sales in Europe are four times greater than U.S. exports to Europe, and European affiliate sales in the U.S. are three times higher than European exports.

The report's lead author, Daniel Hamilton, warned that the ripple effects from the trade conflict could damage these vital economic links. Specifically, intra-firm trade, which accounts for about 90% of Ireland’s and 60% of Germany’s trade, could be severely impacted. Hamilton also highlighted the risk of disruption in services trade, data flows, and energy, with Europe heavily dependent on U.S. liquefied natural gas (LNG) imports.

"The ripple effects of conflict in the trade space will not be confined to trade. They ripple through all of those other channels, and the interactions are quite significant," Hamilton noted.

Let's recall that President Donald Trump has recently threatened a 200% tariff on European wine, Champagne, and spirits if the EU proceeds with its planned 50% tax on American whiskey. This escalation highlights the broader strategy of using import taxes to bolster American manufacturing, though it has led to market volatility and job losses in sectors like Kentucky Bourbon. European Commission President Ursula von der Leyen has expressed a willingness to negotiate but also affirmed readiness to defend EU interests.

The trade tensions have already begun affecting companies. BMW, for instance, anticipates that U.S. trade tariffs will cost it at least €1 billion in 2025, disrupting the global automotive market. The tariffs particularly impact BMW's China-made electric vehicles and have contributed to an 8.4% drop in annual revenue. European leaders have criticized the tariffs, highlighting potential detrimental effects on both European and American economies.

Analysts warn that the tit-for-tat strategies could extend beyond goods, potentially affecting services and overall transatlantic company operations, leading to far-reaching economic repercussions.

By Khagan Isayev