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International trade

European Businesses Face Uncertainty Amid Trump's Tariff Threat

Strategic Insights

— 2 min read

European businesses are struggling to develop long-term plans due to the uncertainty caused by President Trump's latest threat of a 30 percent tax on goods imported from the European Union. The threat, made on Saturday, leaves businesses facing tariff levels not seen since the end of the 19th century, and many say it's making it difficult and costly to make decisions on strategy, hiring, and investments.

The European Union is the biggest exporter to the United States, accounting for $600 billion of $3.2 trillion in annual U.S. imports. Mr. Trump's latest threat is more severe than what European businesses expected, and many had been operating on the assumption that a deal would be reached that included his initial 10 percent tariff. Even if negotiations ultimately avert the highest new tariffs, the longer it takes to get there, the more economic damage will accumulate.

Key Takeaways:

  • The European Union is the biggest exporter to the United States, accounting for $600 billion of $3.2 trillion in annual U.S. imports.
  • Mr. Trump's latest threat of a 30 percent tax on goods imported from the European Union leaves businesses facing tariff levels not seen since the end of the 19th century.
  • The uncertainty caused by President Trump's tariff threats is making it difficult and costly for businesses to make decisions on strategy, hiring, and investments.
  • European businesses are considering moving production to countries with lower tariff levels or sending unfinished products for assembly in the United States to avoid the sting of tariffs.
  • The European Trade Union Confederation warned that 20 percent tariffs could put at least 700,000 jobs at risk in the European Union, and that doesn't include sector-specific tariffs on cars, steel, and more.
  • German exports to the United States fell more than 13 percent in May from a year earlier, and German economy ministry expects tariffs to be a drag on German growth in the second half of the year.

Statistics:

  • The European Union accounts for $600 billion of $3.2 trillion in annual U.S. imports.
  • European businesses are facing tariff levels not seen since the end of the 19th century.
  • The European Trade Union Confederation warned that 20 percent tariffs could put at least 700,000 jobs at risk in the European Union.
  • German exports to the United States fell more than 13 percent in May from a year earlier.
  • The EU fears that 30 percent tariffs could have "even more dramatic" effects on the economy.

Sources:

  • Maros Sefcovic, the European Union's trade commissioner
  • Salomon Fiedler, an economist at Berenberg Bank
  • Nadia Lovell, senior U.S. equity strategist at UBS
  • David Deissner, director of the Foundation for Family Businesses
  • Eleonora Catella, deputy director for international affairs at BusinessEurope
  • The European Trade Union Confederation
  • The Institute for Macroeconomic and International Policies in Paris
  • Germany's economy ministry
  • Jeanna Smialek, contributed reporting from Brussels

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