In March of 2025, President Donald Trump imposed a 25% tariff on imports of metal, aluminum, cars, and sure vehicle elements. European Union (E.U.) members, besides Hungary, introduced retaliatory tariffs of 10% to 25% on particular U.S. imports.
On April 2, Trump proclaimed, “Liberation Day” and added a worldwide baseline tariff of 10%, plus personalized so-called “reciprocal tariffs.” As a result of the 2024 U.S. deficit with the E.U. was 39% of imports, he imposed a “discounted” 20% reciprocal tariff on most E.U. items not topic to the 25% tariff. After per week, excluding China, Trump suspended reciprocal tariffs for 90 days to facilitate negotiations, and the E.U. delayed its retaliation.
Whereas this may occasionally look like Trump beginning a commerce warfare, in actuality it’s Trump ratcheting up a long-simmering warfare in opposition to america fought with protectionist commerce insurance policies, together with by a few of our closest allies. Put aside that Trump’s reciprocal tariffs are literally punitive tariffsthat the commerce warfare is miserable international inventory and bond markets, elevating the specter of recession, and threatening U.S. financial primacy. These are criticisms largely primarily based on making an attempt to do an excessive amount of, too shortly. Turning to the illness, Trump is correct. We generally are handled higher by our enemies than by our so-called commerce allies. That’s earlier than counting the trillions of {dollars} America has spent on their protection.
Collectively, the U.S. and E.U. signify nearly 30% of worldwide commerce and 43% of worldwide GDP. Final yr, the U.S. exported $370 billion of products to the E.U. and imported $606 billion, producing a $236 billion deficit. The U.S. final had a surplus with the E.U. in 1991.
Most Individuals don’t notice how highly effective the U.S. economic system is in comparison with the E.U. In 2024, the U.S. GDP exceeded $29 trillion (about $86,600 per particular person), in comparison with $19 trillion for the E.U. (about $45,300 per particular person). When the E.U. takes benefit of america, it actually ought to suppose twice.
Excessive tariffs should not Europe’s principal offense. As an alternative, the E.U. deters U.S. competitors by requiring American firms to conform on a worldwide foundation with its far-left antitrust, censorship, knowledge privateness, and DEI guidelines; limits authorities buying to merchandise with at the very least 50% native parts and E.U. possession; and units requirements for non-E.U. firms that modify country-by-country, making it prohibitively costly to do enterprise within the E.U.
One of many starkest outcomes of the commerce imbalance is the auto sector. Final yr, the U.S. imported 757,654 new autos from the E.U., however the E.U. imported solely 169,152 new autos from the U.S., many of which had been manufactured by U.S. subsidiaries of E.U. automotive firms.
The U.S. is the world’s second-largest agricultural dealer, behind the E.U. Over the past 25 years, the share of U.S. agriculture exports going to the E.U. dropped from 15% to 7.2%. Complete exports grew from about $9 billion to $13 billion, nicely beneath inflation. Conversely, from 2013 to 2024, U.S. agriculture imports from the E.U. almost tripled to about $34.5 billion.
In February, President Trump known as the E.U.’s commerce practices an “atrocity” and asserted that the E.U. “take(s) nearly nothing and we take every thing from them.”
Based on the U.S. Commerce Consultant report on International Commerce Obstacles, E.U. obstacles embody, amongst many others:
Tariffs as much as 26% for fish and seafood, 22% for vans, 14% for bicycles, 10% for cars, and 6.5% for fertilizers and plastics. Tariff codes improperly reclassify processed meals into increased tariff classes.
E.U. legislation restricts non-E.U. possession in quite a few sectors.
Packaging and labeling necessities, requirements, and technical obstacles impede market entry for U.S. merchandise that meet worldwide requirements, together with chemical compounds, medical units, wine, spirits, meals and agricultural merchandise, meat, and stay cattle.
The E.U. imposes fines as much as 20% of the worldwide income on massive digital service suppliers that fail to adjust to its censorship, promoting, and content material guidelines. The E.U. makes use of this authority to undermine U.S. competitiveness.
Information maintained exterior of the E.U. should adjust to guidelines that battle with U.S. legislation, and France requires that cloud suppliers that deal with “extremely delicate” knowledge have to be at the very least 61% E.U.-owned and “immune” from non-E.U. legal guidelines.
Quotas, subsidies, and content material restrictions restrict the alternatives for U.S. produced movie and tv content material, and U.S. owned content material distributors, whereas AI and mental property legal guidelines restrict the rights of creators to be remunerated for his or her content material, or preserve confidentiality.
Quite a few E.U. nations require E.U. nationality to apply legislation, and for different skilled licenses.
Whereas earnings and financial savings price disparities are partially liable for the E.U.-U.S. commerce deficit, the breadth of restrictions performs a major position. The U.S. shouldn’t be subsidizing the E.U.’s economic system, paying for its protection, or relinquishing management of worldwide requirements organizations to E.U. members. In the case of international commerce, liberté, égalité, fraternité is an empty slogan.
If the E.U. fails to make appreciable concessions inside the subsequent few months, Trump ought to reply with correctly computed and focused tariff and non-tariff measures. Whereas this may occasionally scale back commerce, financial development, and prosperity, if well-calibrated, the blame – and the brunt of the price – will fall squarely on the Europeans.
Kenin M. Spivak is founder and chairman of SMI Group LLC, a world consulting agency and funding financial institution. He’s the writer of fiction and non-fiction books and a frequent speaker and contributor to media, together with RealClear, The American Thoughts, Nationwide Overview, tv, radio, and podcasts.
