US President Donald Trump has threatened to impose tariffs on European goods, escalating tensions between Washington and Brussels. His announcement caused the euro to hit a two-year low against the dollar, trading at 1.0141 before recovering slightly to 1.023.
Trump insists tariffs will protect American jobs and industries, but European leaders see them as unjustified and harmful. European Commission President Ursula von der Leyen has warned that Brussels will respond firmly if Washington proceeds. “Retaliation will be firm, even at the cost of endangering one of the world’s most important trade relationships,” she said.
Canada, Mexico, and China have already taken action. Canadian Prime Minister Justin Trudeau announced 25% tariffs on US goods worth over $100 billion. Mexico’s President Claudia Sheinbaum promised a proportionate response. Beijing filed a case at the World Trade Organization and announced “corresponding countermeasures.”
Europe finalising its strategy
Europe is now finalising its strategy. The European Central Bank is preparing impact assessments, while the EU Trade Directorate is listing US imports that could face counter-duties of 50% or more. Potential targets include American whiskey, bourbon, SUVs, and pick-ups. French officials advocate a “Buy European Act” to prioritise intra-EU trade and reduce reliance on US goods.
Deputy Prime Minister Antonio Tajani reaffirmed Italy’s role in mediating between Brussels and Washington. “The tariff war doesn’t benefit anyone – also because negotiations will need to take into account EU-US ties”, Tajani wrote. “We have ideas and a strategy to safeguard our companies with Italy that will be the best EU ambassador in the dialogue with Washington”, he noted in a post on X.
Prime Minister Giorgia Meloni is expected to address the issue at an upcoming EU summit. While she maintains strong ties with Trump, European leaders fear he could exploit divisions among member states.
The trade dispute comes as EU economies struggle with inflation and slow growth. Business leaders warn that tariffs will increase costs for European consumers and industries. “Trump is playing a game without winners,” said ECB board member Klaus Knot, cautioning that consumers on both sides of the Atlantic will bear the consequences.
The EU remains open to negotiations, with leaders hoping to avoid an all-out trade war. However, if Washington does not back down, Europe stands ready to defend its economic interests.
