Background:
1) Origins in Trump’s “America First” Trade Strategy
In both his first and second presidential terms, Donald Trump has pushed a protectionist trade policy meant to:
Support U.S. manufacturing (especially steel,
aluminum, and autos),
Reduce trade deficits with major partners like the EU,
And assert U.S.
leverage in global economic competition.
Under U.S.
law-notably Section 232 of the Trade
Expansion Act of 1962- the president can impose tariffs on
imports deemed a threat to national security. Trump used this justification to
hit metals and, more recently, other sectors.
2) 2018–2020 History with the EU
Trump first slapped 25 % tariffs on steel and 10 % on aluminum imports in 2018.
The EU responded with its own duties on U.S.
goods (like bourbon, motorcycles, and jeans).
Over subsequent years, both sides
suspended many of these duties while negotiating broader trade arrangements
(e.g., tariff-rate quotas and discussions about a Global Arrangement on
Sustainable Steel and Aluminum).
📈 The 2025–2026 Escalation
🔥 Trump Re-Imposes and Expands Tariffs
In early 2025, Trump:
Reinstated the 25 % steel tariff and raised the
aluminum tariff from 10 % to 25 %,
Expanded tariffs to include derivatives of steel and
aluminum (machinery parts, goods with metal content, etc.).
This means even products partially
made with steel or aluminum now face duties, putting EU exporters at a
disadvantage.
Possible WTO Legal Disputes
Trade law experts have warned that
the U.S. may
struggle to justify these metal tariffs under World Trade Organization (WTO)
rules, since the national security claim is hard to substantiate and could
invite more retaliation from the EU.
European Reactions
Counter-Tariffs and Retaliation Plans
In response to U.S. measures (affecting roughly €26 billion
of EU exports), the European Commission has:
Reintroduced tariffs on U.S.
goods previously suspended,
Prepared new counter-measures on additional U.S.
products in phased steps.
EU leaders describe U.S.
tariffs as harmful to businesses and consumers, and warn that they disrupt
integrated supply chains.
Ø
Moves toward Negotiation
Despite escalation risks, both
sides have also shown willingness to talk:
A framework trade agreement was announced in mid-2025,
suggesting a baseline 15 % tariff on
many EU exports better than earlier threatened levels (e.g., 30
%).
As of January 2026, the EU is likely to resume ratification discussions
on that trade deal after Trump dropped a tariff threat linked to another
diplomatic issue.
This shows political pressure on
both sides to shift from confrontation to more structured negotiations.
📊 Economic Impact So Far
📉 For Europe
Direct impact is modest overall only a small share of
EU industrial output goes to the U.S.,
so direct tariffs don’t hit the whole economy hard.
However, certain sectors (steel,
autos, and related machinery) feel the pain more, and uncertainty can damp
investment.
Ø
For the U.S. and Global Economy
Experts warn that sustained tariff
conflicts can:
Raise input prices for U.S.
manufacturers who need imported metals,
Disrupt global supply chains,
Push allies to diversify trade
away from the U.S.
if tariffs look permanent.
Ø
Future Perspectives
Here’s the juicy part what might come next:
1) Negotiation and
Trade Deal Ratification
The 2025 framework agreement could
be finalized and ratified in 2026, reducing tariffs and creating
predictability.
2) Ongoing
Tensions and Retaliation
If negotiations stall, tit-for-tat
escalation remains possible especially if the U.S.
expands tariffs into cars, tech, or
other sectors or if the EU responds with broader
counter-measures.
3) WTO or Legal Battles
The EU could pursue WTO challenges
or legal claims, increasing costs and dragging disputes into global trade
courts.
4) Strategic Shifts
Trade policy might become more
entwined with geopolitical issues like
defense cooperation, supply chain security (for semiconductors, critical
minerals), and climate commitments.#TrumpTariffsOnEurope #Write2Earn