The EU has signalled a willingness to go tit-for-tat – and meet tête-à-tête – on trade relations with the US. Whilst pursuing talks between trade representatives, the EU has been preparing for a potential trade war with the US.
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US steel and aluminium tariffs took effect on 12 March 2025, and the US plans to impose additional, “reciprocal” customs duties as early as 2 April 2025. US President Donald Trump has referred to the start date of reciprocal tariffs as “liberation day.”
The EU announced “swift and proportionate countermeasures on US imports into the EU” on 11 March 2025.
The US steel and aluminium tariffs are expected to affect €26 billion of EU exports, or approximately 5% of total EU exports to the US, EU trade commissioner Maroš Šefčovič said in his remarks during a 19 March 2025 hearing of the European Parliament’s International Trade Committee.
European Commission (EC) president Ursula von der Leyen said in a statement dated 11 March 2025 that the EU’s countermeasures are “strong but proportionate. . . . to the economic scope of the tariffs from the United States.” She also said that the EU “will always remain open to negotiations.”
Šefčovič, who has framed the steel and aluminium issue as an overcapacity problem, met with US trade officials on 25 March 2025 to explore “a fair, balanced deal instead of unjustified tariffs.”
After the meeting, Šefčovič reportedly said he expects US tariffs of about 20% beginning in the first week of April.
US Trade Representative Jamieson Greer has also identified excess capacity as the problem to be solved in a 12 March 2025 statement about the EU’s countermeasures.
How is the EU responding to US tariffs?
One step at a time.
The EU set out a two-step approach when it announced the countermeasures, then took a step back when it announced on 20 March 2025 that it would delay its retaliatory tariffs until 13 April 2025. The move came after Trump threatened a 200% tariff on EU alcohol and the EC issued its Steel and Metals Action Plan.
The first step entails reinstating and expanding countermeasures adopted in 2018 and 2020, during the first Trump administration. Those responses were suspended twice – initially until 31 December 2023 and then extended until 31 March 2025. Before the delay announced last week, the EC decided to let the suspension lapse on 1 April 2025.
The second step is to introduce new countermeasures that take effect by 13 April 2025. With the delay, the timing of the first two steps is now aligned. The new countermeasures could impact a long list of US products, ranging from agricultural products to alcohol, cosmetics, apparel and motorcycles.
Several factors may influence products’ inclusion in the countermeasures, such as alternative sources of supply, brands closely associated with the US and sourcing from US states whose members of Congress support tariffs.
A public consultation regarding what should be included in those countermeasures ended on 26 March 2025, and the EC is expected to finalise its proposal for countermeasures in the coming weeks.
Widespread impact
A US-EU trade war would pose risks to a variety of industries, though a recent study from the Peterson Institute for International Economics suggests that it wouldn’t improve the US global trade balance. According to the PIIE’s analysis dated 24 March 2025, although US tariffs could reduce its trade deficit with EU countries, they would push up prices and slow growth. The EU’s countermeasures would also compound those effects, according to the PIIE.
Some strategies to mitigate increased costs and market access challenges include unbundling transfer prices to optimize customs values, relocating production without circumventing otherwise applicable customs duties and reviewing existing contracts, among others.
European steel manufacturers are not happy about the 25% US tariffs. In a 12 March 2025 statement, the European Steel Association (EUROFER) sounded the alarm on the 25% US steel tariffs’ impact on the European steel industry as well as downstream sectors like automotive manufacturing, security and defence, and energy infrastructure.
EUROFER president Henrik Adam said that Trump’s policies “threaten[] to be a final nail in the coffin of the European steel industry.” He also cited excess capacity concerns in noting that “the EU market . . . will be further flooded as steel intended for the US market will be redirected,” posing an “existential threat to European steel.”
In contrast, the American Iron and Steel Institute (AISI) signalled its support as the US steel tariffs took effect. AISI president and CEO Kevin Dempsey said the exclusion process under section 232 of the Trade Expansion Act 1962 was a loophole that had been exploited by steel producers outside the US and “applaud[ed] the president’s actions to restore the integrity of the tariffs on steel.” Dempsey also referred to excess capacity as a contributing factor, but he did not specifically mention the EU.
On 24 March 2025, Trump said that he’ll soon announce new tariffs on automobiles, lumber, semiconductors and pharmaceuticals. It’s unclear how those targeted tariffs would align with the reciprocal tariffs to be announced by 2 April 2025.