US President Donald TRUMP publicly threatened on Wednesday (March 13) to impose further tariff measures against the EU in response to the EU's retaliatory action against US steel and aluminum import tariffs. This trade war has been escalating since TRUMP's return to the White House in January, highlighting his tough stance on international trade imbalances. As the US-EU confrontation intensifies, the relationship between one of the world's largest economic and trade partners is facing an unprecedented challenge.

The EU quickly retaliates, launching retaliatory tariffs

The US policy of imposing a 25% tariff on imported TRON and HT took effect on Wednesday, and the EU immediately announced countermeasures, planning to impose retaliatory tariffs on US goods worth 26 billion EUR (about $283.3 billion) starting in April.

European Commission President Ursula VON DER LEYEN stated that the EU's tariff action is to protect local businesses and consumers from the impact of US trade policies. She criticized the TRUMP administration's tariff measures, saying they not only increase the burden on businesses and consumers, but also disrupt the global supply chain, which could threaten economic stability. VON DER LEYEN emphasized that while the EU's countermeasures are tough, they are still moderate, and the EU is willing to negotiate with the US to seek a solution.

TRUMP's response: The US will impose 'reciprocal tariffs'

Faced with the EU's retaliatory action, TRUMP responded firmly, threatening to impose 'reciprocal tariffs', meaning that the US will impose the same tariff rate on the EU as their tariffs.

TRUMP said during a meeting with Irish Prime Minister Micheál MARTIN: "Of course I will respond!" He again criticized the EU for 'taking advantage of the US', and believed that the US has been too soft in dealing with this issue in the past. In addition, he also mentioned that Ireland's low corporate tax rate has led to a 'huge trade deficit' between the US and the country. According to data from the Central Statistics Office (CSO) of Ireland in 2023, Ireland's trade surplus with the US reached 31 billion EUR, indicating that the US has long been at a disadvantage.

TRUMP stated: "The EU is one of the most hostile and abusive tax and tariff institutions in the world, whose sole purpose is to take advantage of the US, and it just imposed a disgusting 50% tariff on whiskey. If this tariff is not immediately removed, the US will soon impose a 200% tariff on all wine, champagne and alcohol products from France and other EU representative countries. This will be a good thing for the US wine and champagne business."

Trade imbalance becomes the focus, US-EU tensions escalate

The issue of trade imbalance has been one of the main complaints of the TRUMP administration against its international trade partners. Although he has imposed tariffs on Mexico, China and Canada, the EU has not been a major target until now. However, this time TRUMP has clearly targeted the EU, threatening to impose a 25% tariff on its imported goods, further escalating the tensions.

According to data from the European Commission, in 2023 the EU's trade surplus with the US reached 155.8 billion EUR, while the US enjoyed a 104 billion EUR surplus in service trade. The total value of their goods and services trade reached 1.6 trillion EUR, with machinery, vehicles and chemicals being the EU's main export items to the US. If the US imposes high tariffs, it will inevitably affect these industries and further impact the European economy.

The trade war is feared to continue to escalate, putting pressure on the global economy

Since TRUMP took office in January, the US-EU trade relationship has gradually deteriorated due to the tariff issue. As early as the Cabinet meeting on February 26, TRUMP publicly complained that the EU was 'taking advantage of the US', accusing the EU of refusing to import US cars and agricultural products, while exporting a large number of goods to the US, leading to trade imbalances.

The latest US implementation of steel and aluminum tariffs is expected to affect about 26 billion EUR of EU exports to the US, and VON DER LEYEN warned that this will lead to price increases, supply chain disruptions, and even impact the job market. She emphasized that the US-EU trade relationship is one of the most important economic ties in the world, which has brought prosperity and security in the past, and called on both sides to avoid further conflicts to prevent greater shocks to the global economy.

Currently, the two sides have not yet started formal negotiations, and the market is closely watching whether the TRUMP administration will further expand the scope of tariffs, or even affect more industries. As the US-EU trade war escalates, the uncertainty of the global economy is also increasing, and businesses and investors are waiting with bated breath for the latest developments in this tariff showdown.