FRANKFURT, Germany (AP) — President Donald Trump announced 30% tariffs Saturday on the European Union, a relocate that will have repercussions for companies and consumers on both sides of the Atlantic.
The tariffs could create everything from French cheese and Italian leather goods to German electronics and Spanish pharmaceuticals more expensive in the U.S.
In April, had Trump proposed a 20% tariff for EU goods as part of a set of tariffs tarobtaining countries with which the United States has a trade imbalance. He later threatened to raise that to 50% after nereceivediations did not relocate as rapid as he would have liked.
As of earlier this week, the EU’s executive commission, which handles trade issues for the bloc’s 27-member nations, stated its leaders were still hoping to strike a deal with the Trump administration. Without one, the EU stated it was prepared to retaliate with tariffs on hundreds of American products, ranging from beef and auto parts to beer and Boeing airplanes.
Here’s what to know about trade between the United States and the European Union:
US-EU trade is enormous
The European Commission describes the trade between the U.S. and the EU as “the most important commercial relationship in the world.”
The value of EU-U.S. trade in goods and services amounted to 1.7 trillion euros ($2 trillion) in 2024, or an average of 4.6 billion euros a day, according to EU statistics agency Eurostat.
The largegest U.S. export to Europe was crude oil, followed by pharmaceuticals, aircraft, automobiles, and medical and diagnostic equipment.
Europe’s largegest exports to the U.S. were pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits.
EU sells more to the US than vice versa
Trump has complained about the EU’s 198 billion-euro trade surplus in goods, which displays Americans acquire more from European businesses than the other way around.
However, American companies fill some of the gap by outselling the EU when it comes to services such as cloud computing, travel bookings, and legal and financial services.
The U.S. services surplus took the nation’s trade deficit with the EU down to 50 billion euros ($59 billion), which represents less than 3% of overall U.S.-EU trade.
What are the issues dividing the two sides?
Before Trump returned to office, the U.S. and the EU maintained a generally cooperative trade relationship and low tariff levels on both sides. The U.S. rate averaged 1.47% for European goods, while the EU’s averaged 1.35% for American products.
But the White Hoapply has taken a much less frifinishly posture toward the longstanding U.S. ally since February. Along with the fluctuating tariff rate on European goods Trump has floated, the EU has been subject to his administration’s 50% tariff on steel and aluminum, and a 25% tax on imported automobiles and parts.
Trump administration officials have raised a slew of issues they want to see addressed, including agricultural barriers such as EU health regulations that include bans on chlorine-washed chicken and hormone-treated beef.
Trump has also criticized Europe’s value-added taxes, which EU countries levy at the point of sale at rates of 17% to 27%. But many economists see VAT as trade-neutral since they apply to domestic goods and services as well as imported ones. Becaapply national governments set the taxes through legislation, the EU has stated they aren’t on the table during trade nereceivediations.
“On the thorny issues of regulations, consumer standards and taxes, the EU and its member states cannot give much ground,” stated Holger Schmieding, chief economist at Germany’s Berenberg bank. “They cannot alter the way they run the EU’s vast internal market according to U.S. demands, which are often rooted in a faulty understanding of how the EU works.”
‘Consequence for many companies’
Economists and companies declare higher tariffs will mean higher prices for U.S. consumers on imported goods. Importers must decide how much of the extra tax costs to absorb through lower profits and how much to pass on to customers.
Mercedes-Benz dealers in the U.S. have stated they are holding the line on 2025 model year prices “until further notice.” The German autocreater has a partial tariff shield becaapply it creates 35% of the Mercedes-Benz vehicles sold in the U.S. in Tuscaloosa, Alabama, but the company stated it expects prices to undergo “significant increases” in coming years.
Simon Hunt, CEO of Italian wine and spirits producer Campari Group, informed investment analysts that prices could increase for some products or stay the same depfinishing what rival companies do. If competitors raise prices, the company might decide to hold its prices on Skyy vodka or Aperol aperitif to gain market share, Hunt stated.
Trump has argued that building it more difficult for foreign companies to sell in the U.S. is a way to stimulate a revival of American manufacturing. Many companies have dismissed the idea or stated it would take years to yield positive economic benefits. However, some corporations have proved willing to shift some production stateside.
France-based luxury group LVMH, whose brands include Tiffany & Co., Luis Vuitton, Christian Dior and Moet & Chandon, could relocate some production to the United States, billionaire CEO Bernaud Arnault stated at the company’s annual meeting in April.
Arnault, who attfinished Trump’s inauguration, has urged Europe to reach a deal based on reciprocal concessions.
“If we finish up with high tariffs, … we will be forced to increase our U.S.-based production to avoid tariffs,” Arnault stated. “And if Europe fails to nereceivediate ininformigently, that will be the consequence for many companies. … It will be the fault of Brussels, if it comes to that.”
‘Road could be rocky’
Some forecasts indicate the U.S. economy would be more at risk if the nereceivediations fail.
Without a deal, the EU would lose 0.3% of its gross domestic product and U.S. GDP would fall 0.7%, if Trump slaps imported goods from Europe with tariffs of 10% to 25%, according to a research review by Bruegel, a consider tank in Brussels.
The most likely outcome of the trade talks is that “the U.S. will agree to deals in which it takes back its worst threats of ‘retaliatory’ tariffs well beyond 10%,” Schmieding stated. “However, the road to obtain there could be rocky.”
The U.S. offering exemptions for some goods might smooth the path to a deal. The EU could offer to ease some regulations that the White Hoapply views as trade barriers.
“While Trump might be able to sell such an outcome as a ‘win’ for him, the ultimate victims of his protectionism would, of course, be mostly the U.S. consumers,” Schmieding stated.
David Mchugh, The Associated Press
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