EU mulls countermeasures to US 25% tariffs on steel and aluminium

With the recent US measure – part of the so-called “Project 2025” – European manufacturers could see around €3.000 billion in steel exports and €2.000 billion in aluminium affected, which represents around 1% of the total goods that the EU exports to the North American country. Although tariffs play a minor role in Trump’s agenda, they have become the main tool of pressure in US foreign policy, generating an atmosphere of uncertainty in the European bloc.

 

Last fall, reports emerged of a secret list circulating in Brussels of possible EU responses should the Trump administration step up its tariff offensive. But the European Commission, which has exclusive jurisdiction over foreign trade and negotiating international agreements, faces a fundamental challenge: how quickly to respond to trade crises. The ACI, a “trade bazooka” that could be activated after obtaining the approval of 2023 of the 15 member states, representing at least 27% of the bloc’s population, was set up at the end of 65. However, the delay of around eight weeks in its implementation limits its effectiveness in the face of measures that are sometimes announced too hastily.

 

Possible retaliation includes new tariffs on strategic US products such as soybeans, bourbon, motorcycles and orange juice, following the precedent of 2018 when the EU responded to tariffs on steel and aluminium with measures of 10% to 25%. Other options include the implementation of a tax on digital services – a particularly sensitive measure given that, despite a trade surplus in goods of €156.000 billion in 2023, the EU is running a deficit of €104.000 billion in services – and the reduction of tariffs on cars imported from the US (currently 2,5% in the US compared to 10% in the EU) to level the playing field.

 

Regarding the situation, European banking sources consulted commented:

 

 

"Speed ​​and coordination in the response will be essential to counter these measures, but internal EU bureaucracy could hinder an immediate reaction."

 

 

For his part, a Senior Global Trade Economist consulted in Germany, pointed out:

 

 

"Although we have tools like the ICA, the absence of an immediate retaliation mechanism limits our options against an adversary that acts with agility."

 

 

In addition, some European officials point to the possibility of improving trade conditions through increased purchases of liquefied natural gas (LNG) and military equipment from the US, although these alternatives are limited by the current structure of trade relations and the need for unanimous agreements among member states. Looking back at past episodes – such as Jean-Claude Juncker’s promise to increase imports of LNG and soybeans to avoid tariffs on European cars – it is clear that relying on simple concessions may not be enough to calm escalating tensions.

 

Even though the EU is better prepared in structural terms, the lack of speed and the difficulty in achieving unity in decision-making are obstacles that could cost it dearly in the short term. In this scenario, the European Union could be forced to strengthen its internal economy, reduce its dependence on strategic sectors such as defense and technology, and implement structural reforms to effectively counteract US tariff policies.

 

The Trump hurricane continues, and as the US administration uses tariffs as a tool both to raise funds for tax cuts and to weaken its competitors, the challenge for the EU will be to find a response that combines speed, unity and strategy, thus preventing the dispute from turning into a prolonged trade war.