After the punitive tariffs announced by US President Donald Trump came into force on Wednesday morning, the European Union (EU) responded with countermeasures of its own. However, these are relatively modest.
While the US imposed import duties of 20 percent on almost all goods from the EU (the previously imposed tariffs of 25 percent on cars, steel and aluminum remain in force), the EU is only imposing tariffs of between 10 and 25 percent on selected goods worth €21 billion. This is less than the €26 billion of steel and aluminum imports to the US from Europe subject to tariffs.
Moreover, the tariffs will only come into force gradually: Around a fifth from mid-April, another portion from mid-May and the levies on almonds and soybeans only at the beginning of December. The list of affected goods, which primarily targets regions with a high proportion of Trump voters, was already drawn up in response to the steel and aluminum tariffs.
Unlike China, which responded to horrendous US tariffs of 104 percent with counter-tariffs of 84 percent, Brussels is holding out for an agreement with Washington. The EU Commission emphasized: “These countermeasures can be suspended at any time if the US agrees to a fair and balanced negotiation outcome.” It went on the say that the EU “clearly prefers to find a balanced and mutually beneficial negotiated solution with the US.”
There are also hopes that—as the German daily FAZ put it—“the power of facts will put Trump in his place,” that the rise in consumer prices in the US and the negative consequences of the tariffs for American companies and financial institutions will persuade Trump to back down. The exchange of blows between the head of Trump’s trade policy Peter Navarro and Tesla boss Elon Musk, who traded bitter insults, was followed with great interest in Europe. However, the hopes associated with this could prove to be misplaced.
The consequences of an escalating trade war between the US and the European Union would be devastating. There are no two other regions of the world that are so closely intertwined economically. Together, they account for almost 30 percent of global trade in goods and services and 43 percent of global economic output (GDP).
In 2024, the EU and the US exchanged goods worth €865 billion and services worth €746 billion. Some 26 percent of EU goods exports went to the US, while 13.7 percent of imported goods came from the US. The EU achieved a surplus of €157 billion in trade in goods (which Trump used to justify the punitive tariffs), while the reverse is true for services: the US had a surplus of €109 billion.
However, there are also voices in Europe pushing for a tougher stance against the US. Germany and France in particular also want to take action against American service companies.
Germany is particularly hard hit by the US tariffs. It exported goods worth €161 billion to the US in 2024. The German pharmaceutical industry and car manufacturer Porsche each delivered around a quarter of their production to the US. Aircraft construction, manufacturers of specialty goods such as medical equipment, shipbuilders, who build cruise ships for the US, and the automotive industry in particular are also heavily affected by the tariffs.
While some carmakers, such as Porsche and Audi, only sell models produced in Europe in the US, others, such as Volkswagen, BMW and Mercedes, have plants in the US, but also import from Europe and Mexico and therefore remain dependent on international suppliers. Audi has already responded to the punitive tariffs with an export ban and for the time being only intends to sell cars in the US that are already stockpiled locally.
Outgoing German Economics Minister Robert Habeck (Greens) proposed on Monday to use the “Anti-Coercion Instrument” against Trump’s punitive tariffs, which is considered a “bazooka” in the EU’s trade arsenal. Introduced in late 2023, the Anti-Coercion Instrument allows for a wide range of countermeasures that go far beyond tariffs. American tech companies such as Alphabet, Meta, Apple, Microsoft and Amazon, which generate billions in sales in Europe, could be restricted in their activities and subject to additional duties. This would set off an escalation spiral with devastating economic consequences.
On Wednesday afternoon, Trump suspended for 90 days the increased tariffs for 75 countries that had shown a willingness to negotiate and left them at a standard tariff of 10 percent. At the same time, he announced a further increase in tariffs on imports from China to 125 percent with immediate effect. However, even if the conflict between the US and the EU does not escalate further, Europe will be directly affected by the trade war between the US and China. The European stock markets have reacted with heavy fluctuations and losses.
The EU is facing a dilemma. If it supports China against Trump’s tariffs, there is a risk of an escalation of the conflict with the US and the final break-up of NATO, on which it relies in the war against Russia. If it stands with the US against China, it risks losing its most important trading partner alongside the US. In 2024, the EU exported goods worth €213 billion to China and imported goods worth €518 billion.
The EU is therefore trying to defuse the conflict. Commission President Ursula von der Leyen spoke to Chinese Prime Minister Li Qiang on the phone on Tuesday and called on him to prevent further escalation. In view of the widespread disruption caused by the US tariffs, Europe and China, as the world’s two largest markets, have a responsibility to ensure a free and fair trading system, said von der Leyen. But she was unsuccessful. China was not prepared to bow to US pressure and increased its counter-tariffs from 34 to 84 percent a day later.
Even if Trump imposes tariffs on “friend and foe,” China is the real target of his offensive, as the latest turn of events shows. Even the conservative FAZ understands this. “With his tariff war, Trump is exacerbating the major global conflict that will shape the 21st century,” it says in a commentary by Nikolas Busse. China, and not Russia, is the main problem from the United States’ perspective. “Trump has imposed his tariffs on the whole world, but his military plans are primarily aimed at China. In this he is no different from his predecessors.”
Germany and the EU are reacting to the US’s aggressive approach by rearming in order to participate independently in the violent imperialist redivision of the world. The price is being paid by the working class and young people on both sides of the Atlantic in the form of mass redundancies, social cuts, state repression and their use as cannon fodder in future wars.
Parties that once called themselves left or reformist are playing a key role in this. In Germany, on the same day that Trump’s punitive tariffs came into force, the Social Democrats concluded a coalition agreement with the conservative Christian Democratic Union/Christian Social Union that centers on the most comprehensive rearmament since Hitler, the expansion of the repressive state apparatus, the adoption of the fascist Alternative for Germany’s refugee policy and job cuts.
In the US, the trade unions are among the most ardent supporters of Trump’s punitive tariffs. In Germany, they are responsible for lowering real wages and organizing mass layoffs in the car industry.
The working class must not allow itself to be dragged into this maelstrom of nationalism and reaction. The working class is the only social force that can oppose it by uniting internationally and fighting for the overthrow of capitalism and the construction of a socialist society.