The trade war relaunched by Donald Trump clearly targets the European Union, even if the impacts are limited for the moment. The US auto sector could be targeted by counter-sanctions.
The new Trump presidency is already notable for its inconsistency. During the presidential campaign, Donald Trump promised tariffs on all European products in the range of 10 to 20%. Upon his arrival at the White House, he maintained his tariff promises against the EU while only implementing those already put into place against steel and aluminium (25%) [1] during his first term [2]. For the moment, the announcements have only been partially implemented: the American customs duties remain below those promised, and they are not reserved solely for the EU.
A clearer threat to the European Union
However, the threat weighs heavily and is becoming clearer. On February 26, Donald Trump reaffirmed his desire to impose 25% customs duties on European products "soon", without specifying whether this will affect all products and when the measure will come into force.
The president justifies this tariff war by a commercial relationship that he considers unbalanced between the United States and the European Union. The American president is also up in arms against the European legal environment, which he considers to be detrimental to the interests of American companies. Finally, Trump wants to establish tariff reciprocity that could cause great suffering to sensitive and already weakened European commercial sectors, such as the automotive industry.
Under the Biden presidency, US dependence on European products had indeed increased. These now represent nearly 25% of its imports in value.
Conversely, imports of goods from the United States represent only 15% of total European imports. The trade balance is negative for the Americans – around 157 billion euros in 2023. However, the overall trade relationship, if we add together goods and services, is more or less balanced. The United States even enjoyed a trade surplus of 109 billion in services in 2023. This is what the European Commissioner for Trade Mavros Sefcovic was quick to point out [3], following Donald Trump's comments. The overall trade balance (goods and services) was in surplus of 48 billion euros, almost 30 billion less than two years earlier. So if we look at goods and services, the positive European trade balance therefore is tending to reduce.
If the new president carries out his threats, the European Union has promised retaliatory action, although it has not yet revealed the full details [4]. These could take four forms:
- Customs duties on certain American products.
- The use of the European instrument against economic coercion.
- Export controls in sectors vital to the American industrial base.
- “Taxes” or customs duties applied to services originating from the United States.
Two aspects are important for analysing the impact on transatlantic logistics flows: the categories of products that could be affected by US sanctions and European counter-sanctions and the nature of the goods affected (containerised or in bulk).
Customs duties on aluminium and steel
For the moment, the American attacks remain targeted. The steel and aluminium products on which the Trump administration will apply customs duties represented 2.6% of European exports to the United States for the year 2024, or nearly 15 billion euros. In recent years, the market share of European products in this sector of activity in the United States has expanded, increasing from 12 to 14% between 2020 and 2024 [5].
By applying customs duties on this category of products, the United States is re-establishing tariff sanctions previously lifted by the Biden administration, citing an inability of the targeted countries to exercise self-restriction on their exports to the United States. These tariff measures have in the past given rise to so-called "safeguard" countermeasures on the part of the EU, in 2018 and 2020. Among the products targeted by the countermeasures were iconic American items such as Harley Davidsons and Levi's jeans.
- The EU's response
The European Commission has chosen to allow these countermeasures to be reapplied without having to legislate, from April 1. Indeed, the latest European regulation concerning these customs countermeasures provided for a suspension until March 31, 2025 [6]. This enables it to respond in a targeted and proportionate manner to the American attack and remain within the framework of international commercial law.
However, the United States wants to go further. The US Secretary of Commerce will establish by 12 May 2025 a mechanism by which the United States can continue to expand the list of steel and aluminium products subject to additional duties of up to 25%. US tariffs will thus affect a total of €26 billion of EU exports, which corresponds to around 5% of total EU goods exports to the US.
The European Commission has therefore also decided to step up its response, with a new package of additional countermeasures, will target approximately €18 billion worth of goods. “The objective is to ensure that the total value of the EU measures corresponds to the increased value of trade impacted by the new US tariffs”, the Commission says.
The first step in this process consists of launching of a two-week consultation with EU stakeholders. "These consultations will ensure that the right products are chosen for inclusion in the new countermeasures, ensuring an effective and proportionate response that keeps disruption to EU businesses and consumers to a minimum", says the Commission. On 12 March, the list of targeted products proposed by the Commission was published on the DG Trade website. It includes industrial products (steel and aluminium products, textiles, leather goods, household appliances, household tools, plastics, wood products) and agricultural products (poultry, beef, certain seafood, nuts, eggs, dairy products, sugar and vegetables).
The consultation phase will end on 26 March. The Commission will then analyse the contributions, finalise its draft implementing act and consult the Member States on this document. “The legal basis for this act will be the implementing regulation (Regulation (EU) No 654/2014), as we consider the US measures to be safeguards,” the Commission said.
The adoption process should be completed by mid-April, with the countermeasures entering into force by the same deadline.
The potential implementation of tariff reciprocity
It is unlikely that Donald Trump will stop at tariffs on steel and aluminium. The US administration explained that it wanted to establish tariff reciprocity, that is to say, the application of the same customs duty for a given product, as that which is applied to the same American good exported. An eye for an eye, a tooth for a tooth. The application of such a measure could cause significant damage to already weakened sectors, such as the European automobile industry. In fact, the EU applies a 10% customs duty on American automobiles (which is also the lowest customs duty applied on this product by the European Union), while the United States only applies a tariff barrier of 2.5% on the same products. However, the United States applies higher customs duties on other segments of the automotive sector - 25% for example on pickup trucks, which are the best-selling vehicles on American soil.
The goal of the US administration, with tariff reciprocity, is to force its trading partners to conclude new commercial "deals". However, these agreements would contravene international commercial law as it currently stands. Indeed, trade, as it has been defined since 1945, does not allow for tariff reciprocity since it operates on the basis of the most-favoured-nation principle [7]. The systematic retaliatory measures seen to be needed due to the establishment of a system of tariff reciprocity by America would also not be in accordance with international trade law, because only proportional countermeasures and exceptional circumstances may be permitted. Faced with a new US “principle of reciprocity”, the EU could multiply targeted measures to sanction US exports. This would allow it to remain in compliance with international trade law and therefore be able to defend these measures before the WTO Dispute Settlement Body.
The most effective counter-sanctions levers for the EU
EU measures targeting top-selling US products on the European market could hurt US producers enough to force the Trump administration to back down. Given the composition of US exports to the EU, three categories of US products appear to be particularly sensitive: energy products, medicinal and pharmaceutical products, and products related to the automotive industry.
- Energy products: unlikely
Imports of energy products from the United States are linked to the specific circumstances of the war in Ukraine and Europe’s choice to limit its imports from Russia. As such, the United States accounted for 17% of European oil imports and more than 47% of European gas imports [8], in the first quarter of 2024. Since the US is a strategic energy supplier to the EU, it is unlikely that the EU will sanction US exports in this category. With the exception of Norway, the EU has no other major supplier to substitute for Russian products.
Furthermore, energy tariff countermeasures would be passed on in terms of prices to European consumers and would impact all segments of the European economy. The EU could, at best and in a limited way, favour imports from its Norwegian neighbour (or other suppliers), but this does not constitute a tariff-based trade countermeasure. The hydrocarbon lever is therefore not the ideal weapon in the European tariff arsenal.
- Pharmaceutical and medical products: possible but unlikely
A second possibility for the EU would be to sanction pharmaceutical and medical products from the United States, by diversifying sources of supply. These represented 17% of American exports to the European Union in 2024: following the start of the war in Ukraine and the European decision to reduce its supply from Moscow it is also the second category of exports to have progressed the most since 2020 behind hydrocarbons.
Within the pharmaceutical and medical category, three types of products represent more than a third of these exports: vaccines (26.6 billion euros), medicines (13.5 billion euros) and hormones (8.5 billion euros). Sanctioning these products and temporarily resorting to other sources of imports would put pressure on an American industry for which the European market is one of its main outlets.
However, the Covid 19 outbreak has highlighted the EU's over-reliance on China for medicines and pharmaceutical compounds [9]. Because of this, the radical increase in imports from the United States, an ally, has been part of a European attempt to diversify sources of supply and limit dependence on China. A step backwards is unlikely to achieve consensus among European countries, and also within European institutions: Ursula von der Leyen, President of the European Commission, has so far been particularly vigilant with regards to China. Furthermore, the EU also exports a lot of pharmaceutical products and compounds to the United States. Sanctioning compounds from the United States could impact the production of manufactured medical or pharmaceutical products for export to the US market, primarily from Ireland.
For both of these reasons - the risk of increasing dependence on Chinese compounds, as well as the possibility of sanctions for the European pharmaceutical industry for export - pharmaceutical products are not the most appropriate choice for European countermeasures.
- Products for the automotive sector (vehicles and parts): very likely
Products for the automotive sector are part of the “leaderboard” of product categories most imported into Europe from the United States. These items are not strategic, like hydrocarbons or medicinal compounds. They are also not necessary for the manufacture of products intended for export as some pharmaceutical products may be. Furthermore, US import sanctions on steel and aluminium actually affect certain export products to Europe made from these materials. Finally, implementing European countermeasures would have a significant impact on the American automobile industry, which is very dear to the American president's electorate. This category therefore appears to be the most likely target among American products that could be aimed at by the European Union if retaliatory measures are necessary.
Conclusion
US sanctions on European steel and aluminium will have a downward effect on the flow of containerised goods exported to the United States. The sanctions, however, only affect 5% of European exports and it remains unlikely that US industries will find a viable domestic ("All-American") alternative to these European products. The hypothesis that European exports to the United States in this product category remain unchanged is therefore plausible. The reintroduction of European safeguard measures could have a downward impact on the flow of containerised goods from the United States, but only marginally, since the products targeted are very specific (Harley Davidsons, jeans, etc.).
Among the countermeasures available to the EU, those targeting products from the automotive sector appear more likely. They would again have little impact on the flow of containerised goods from the United States.
However, the European Commission will have to make its voice heard among certain European states. On trade issues, it is the European Union that decides on countermeasures, since it has exclusive competence over trade. Yet some European states are heavily dependent on trade with the United States, and may be reluctant to impose counter-sanctions. In 2023, more than 45% of Irish exports were destined for the United States, as were 22% of Italian and German exports. Thirteen European countries (out of 27) find more than 15% of their outlets on the American market. It is therefore likely that intra-European negotiations on this subject will be difficult and that other measures such as a tax on services or the implementation of the European anti-economic coercion procedure will be favoured.
[1] White House, "Fact Sheet: President Donald J. Trump Restores Section 232 Tariffs", 11/02/2025.
[2] These customs tariffs do not only target European products but all products in this category on which specific exclusion agreements had been signed with the United States during the Biden presidency: Australia, Brazil, Canada, Mexico, Japan, South Korea and the United Kingdom are therefore also concerned.
[3] European Commission, "Speech: Remarks by Commissioner Šefčovič at the press conference following the joint informal Competitiveness and Foreign Affairs Council meeting", 04/02/2025.
[4] European Commission, "Statement by President von der Leyen on announced US tariffs", 10/02/2025.
[5] Own calculations, source: USITC.
[6] European Commission, "COMMISSION IMPLEMENTING REGULATION (EU) 2023/2882 of 18 December 2023 suspending commercial policy measures concerning certain products originating in the United States of America imposed by Implementing Regulations (EU) 2018/886 and (EU) 2020/502" , 18/12/2023, article 2.
[7] This principle requires a member A who wishes to give a preferential rate to a member B to apply this new rate to all the nations with which they trade.
[8] Eurostat, "EU imports of energy products continue to drop", 01/07/2024.
[9] Lou Roméo, "La dépendance à la Chine au cœur de la pénurie mondiale d’Amoxiciline et de Paracétamol », France 24, 24/12/2022.
