Burak UzunTransatlantic trade is teetering on the edge as President Donald Trump’s renewed protectionism has sparked fears of a renewed trade war.
With a three-month tariff truce expiring this weekend, the proposed meeting of the EU Foreign Affairs Council on July 14 could prove decisive for Europe’s response to Washington and its increasingly complex ties with China.
Since returning to the Oval Office, President Trump has wasted little time reigniting one of his signature policies: aggressive trade protectionism. The new tariffs, as outlined in official White House and Department of Commerce notices, are stark.
A 50 percent duty on all steel and aluminium imports into the US, a 25 percent tariff on cars and car parts, and a “universal” 10 percent levy imposed on most other imported goods.
The rationale, Trump says, is national security and economic resilience. “American industry has been under siege,” he declared during a rally in Pennsylvania last month. “We’re taking back control of our markets and protecting American jobs.”
Yet for European officials, the announcement has triggered a sense of deja vu. The EU spent much of Trump’s first term battling trade disputes ranging from aircraft subsidies to digital taxes.
Officials fear a new round could be even more disruptive, coming at a moment of global economic uncertainty.
For the EU, the challenge is deeply strategic.
Retaliate too forcefully, and risk a spiral into a full-scale trade war that could harm European exporters, particularly automotive giants like Volkswagen, BMW, and Stellantis.
Hold back, and risk appearing weak both to Washington and to other global trading partners.
Brussels officials confirm that countermeasures are prepared and legally vetted.
A senior EU trade official, speaking on background, described the measures as “targeted, proportionate, and designed to uphold the integrity of the multilateral trading system.”
Potential EU counter-tariffs could hit iconic American exports, including bourbon whiskey, Harley-Davidson motorcycles, denim products and agricultural goods like peanuts and cranberries.
These products were targeted in previous EU measures during Trump’s earlier tariff wars, chosen for their symbolic value and political resonance in key US states.
China factor and rising political stakes
Monday’s EU Foreign Affairs Council is not solely focused on transatlantic tensions.
Equally pressing is Europe’s trade relationship with China, which has grown increasingly fraught amid disputes over market access, human rights concerns, and allegations of economic coercion.
With the economic and geopolitical spheres now closely intertwined, European experts believe that China will be closely watching the EU’s response to Trump’s tariffs.
Indeed, some European policymakers worry that showing restraint toward Trump’s tariffs could be interpreted by China as a sign of weakness, complicating Europe’s efforts to push back against Chinese industrial policies and subsidies.
The looming tariffs are sparking anxiety across European industries already battered by inflation, supply chain disruptions, and the lingering economic aftershocks of the Covid pandemic and the Ukraine war.
The European Automobile Manufacturers’ Association (ACEA) issued a stark warning this week. “A 25 percent tariff on EU vehicle exports to the US would cost our industry billions and threaten thousands of jobs,” the group said in a statement.
Similarly, European steelmakers fear losing access to a lucrative US market while facing overcapacity pressures at home.
Beyond economics, the showdown has profound political implications. European leaders are facing domestic electorates increasingly sceptical of global trade agreements, but also deeply wary of antagonising a crucial ally like the US.
In Germany, the issue is especially sensitive given the automotive sector’s outsized role in the economy and political discourse.
A sharp escalation in tariffs could reverberate through employment, exports, and the broader EU–US relationship.
Meanwhile, France has signalled a tougher stance. President Emmanuel Macron, speaking in Brussels earlier this week, declared that Europe “must defend its interests firmly” but stressed the need for dialogue to avoid an all-out trade war.
Possible off-ramps
Despite the looming deadline, trade experts say there’s still room for manoeuvre. The EU and US trade teams have held intense discussions throughout the past week, exploring carve-outs, temporary exemptions, or phased tariff reductions.
One potential compromise involves exemptions for electric vehicles and key green technologies, areas where both sides share common climate goals.
Another idea floating in diplomatic circles is a joint framework for managing overcapacity in global steel markets, aimed at countering Chinese production surges.
Yet time is running short. Financial markets are watching the standoff with growing unease. European equities slid modestly on Friday, with auto and industrial stocks underperforming amid tariff fears.
Currency analysts note that a transatlantic trade war could weigh on the euro, while also potentially boosting safe-haven demand for the US dollar.
At the same time, global supply chains remain vulnerable. Tariffs on car parts, steel, and aluminium threaten to drive up production costs across industries from construction to technology.
All eyes now turn to the crucial Foreign Affairs Council meeting. EU ministers will arrive in Brussels for what could be marathon discussions, punctuated by high-stakes bilateral conferences and press briefings.
The Danish presidency of the EU and the European Commission are scheduled for a joint press conference at 1230 GMT, with live coverage already booked on major European broadcast networks.
Whether a last-minute deal can be salvaged or whether Europe will swing into countermeasure mode, the end result could set the tone for transatlantic relations for years to come.
For the EU, this is no longer just about tariffs but how it defines its partnership with America in a world that’s changing fast.
For now, Europe waits — and prepares.
