US Imposes Steep 20% Tariffs on EU Goods Sparking Trade Tensions and Potential Retaliatory Measures
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US Imposes Steep 20% Tariffs on EU Goods Sparking Trade Tensions and Potential Retaliatory Measures
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This April, the trade landscape between the US and the European Union has entered a turbulent new phase. President Trump, following his return to office, announced sweeping tariff hikes as part of a new Reciprocal Tariff Policy. According to taxnews.ey.com, on April 2nd, President Trump unveiled a set of “reciprocal” tariffs targeting a wide range of US trading partners, including the EU. Effective April 9, 2025, country-specific tariffs for EU-origin goods jumped to 20%, even on products normally covered by free trade agreements. The baseline universal tariff is 10%, but for the EU and some others, it’s significantly higher. These new tariffs do not replace earlier measures—tariffs on steel and aluminum, for instance, remain at 25%.
The European Union has been quick to respond. On April 9th, EU leaders approved a slate of countermeasures affecting approximately 18 billion euros of US-origin products, aiming to match the impact of the US tariffs on European steel, aluminum, and a swath of other goods. However, in a move to keep negotiations open, the EU has paused the implementation of these new tariffs for 90 days, hoping to avoid a full-blown trade war and find a resolution through dialogue. Cleary Gottlieb’s April analysis confirms that these countermeasures were set to come into effect April 15th but will remain suspended unless talks break down.
The stakes are high and businesses are already feeling the pressure. KPMG Meijburg reports that the 20% tariffs on European products are causing significant concern for EU exporters, prompting urgent calls for strategic guidance and risk assessments. Trade ministers from across the EU have called crisis meetings, with some advocating hardline retaliatory action and others warning about the risks of reigniting inflation across Europe.
The background to this escalation, as detailed by Wikipedia, includes years of US-EU trade imbalance. The US claims a deficit in goods, while the EU notes its own deficit in services. Trump has repeatedly emphasized the need for “fairness” and “balance,” threatening—and now delivering—tariffs unless the European Union boosts imports of American cars, agricultural goods, and energy.
The situation remains fluid. For now, tariffs remain at a baseline of 10% for most EU goods, but the 20% rate is in effect for a significant list of products. Both sides are using the next three months to try and reach a negotiated settlement, but businesses should prepare for the possibility that these tariffs become the new normal if talks fail.
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