EU-US Trade War Escalates: Trump Tariffs Spark Tensions and Potential Retaliatory Measures Ahead of Crucial Negotiation Deadline
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EU-US Trade War Escalates: Trump Tariffs Spark Tensions and Potential Retaliatory Measures Ahead of Crucial Negotiation Deadline
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As of May 11, 2025, the trade landscape between the United States and European Union remains in a state of tension following President Trump's sweeping tariff policies implemented last month. The current baseline tariff rate on EU imports stands at 10%, reduced from the initially announced 20% after Trump granted a 90-day negotiation window on April 9th.
This temporary reprieve came after the EU approved a package of 25% retaliatory tariffs on €21 billion worth of US imports. The European Commission suspended these countermeasures to allow for negotiations during this 90-day period, which is now approaching its halfway point.
European Commission President Ursula von der Leyen has warned that if negotiations fail by early July, the EU is prepared to deploy what she described as "EU trade bazooka measures" targeting America's substantial services surplus with Europe.
Just three days ago, on May 8th, the EU proposed stronger retaliatory tariffs on nearly €100 billion of US imports, including aircraft, passenger cars, medical devices, chemicals and plastics. This escalation came after Trump imposed a 100% tariff on foreign-made films on May 5th, though Europe notably declined to counter-tariff Hollywood productions.
The economic impact of these trade tensions continues to worry experts. Before this trade war began, the average US tariff on EU imports was just 1.47%, while EU tariffs on US goods averaged 1.35%. The current 10% baseline represents an approximately 8.4 percentage point increase compared to 2023 levels.
Italian Prime Minister Giorgia Meloni visited Trump at the White House on April 17th, attempting to persuade him to accept the EU's "zero-for-zero" tariff offer for industrial goods, but no breakthrough has been announced.
Hungarian Prime Minister Viktor Orbán, one of Trump's strongest European allies, was the only EU member to dissent from the bloc's retaliatory measures, highlighting political divisions within Europe on how to respond to American trade pressure.
With the 90-day negotiation window set to expire in early July, both sides appear to be preparing for either breakthrough or breakdown in what has become the most significant transatlantic trade dispute in recent years.
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