Tensions between Washington and Brussels take a disturbing turning point. While transatlantic trade represents a colossal market of $ 9,500 billion, the new taxes imposed by Donald Trump are likely to upset an already fragile balance. A trade war between the two economic powers could lead to inflation of production costs, a drastic drop in exchanges and increasing instability for businesses.
Commercial hardening with immediate consequences
The climate of distrust between the United States and Europe increases. Donald Trump announced a 25 % increase in European steel and aluminum taxes. This decision is part of a strategy which aims to impose “reciprocal” customs tariffs, aligned with those practiced by the EU.
The initiative is perceived as a protectionist gesture, denounced by the American Chamber of Commerce in Europe (AMCHAM EU), which alerts a major risk for the global economy.
“Rather than engaging in a policy of reprisals that would only harm the two economies, the United States should sit at the negotiation table,” insistment Malta Lohan, president of the AMCHAM EU.
The effects of these new measures could be felt very quickly on American production channels.
Indeed, European steel and aluminum represents 20 % of imports of these materials in the United States, essential for the automotive, electronics and industrial machines.
An increase in prices of these components would result in an increase in production costs, which would affect the final price of products sold to American consumers.
The main consequences identified by the AMCHAM EU are as follows:
- Increase in production costs: American companies dependent on European steel and aluminum will see their costs explode, which could directly impact the profitability of their products;
- Cascade effect on consumers: the rise in prices of raw materials will result in inflation of the prices of finished products, and will weigh on the purchasing power of Americans;
- European economic reprisals: the EU could reply by the increase in its own customs duties to American strategic products, which would worsen the protectionist spiral;
- Uncertainty for companies: faced with these tensions, investors are likely to suspend their decisions, which will slow growth and weaken key sectors.
Towards an export paralysis and an investment crisis?
The hardening of taxes does not only concern raw materials. Washington now discusses the possibility of applying 25 % prices on automobile imports, semiconductors and pharmaceuticals from the EU.
Such a measure would affect European exporters, but also American companies depending on these imports. Thus, the AMCHAM had warned that “firm and proportionate countermeasures” could be implemented by the European Commission, which would in particular target exports of liquefied natural gas (GNL), crude oil and American digital services.
The most dependent states of trade with Europe, such as Texas and California, are found on the front line. In 2023, Texas exported $ 96.9 billion in Europe, while California displayed $ 35.3 billion in the continent.
If Europe decided to tax these strategic sectors more, the economic shock could be brutal for American industry. In addition, the threat of prolonged uncertainty over Washington's trade policy already slows down transatlantic investments, and threatens to slow the economy permanently.
“The stake greatly exceeds the simple question of taxes: commercial instability and the multiplication of tariff barriers are likely to cause diversion of economic flows towards other markets. Thus, China and other emerging powers could take advantage of these tensions to strengthen their exchanges with Europe, which would further weaken the position of the United States on the world market, as shown in the possible reorientation to the BRICS.
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