The European Union intends to upgrade its tariff countermeasures against the United States

Recently, the European Commission announced that in response to the United States' "reciprocal tariffs" and its tariff policies on complete vehicles and auto parts, the EU will file a lawsuit with the World Trade Organization and plans to take potential countermeasures against 95 billion euros worth of US imports. The EU pointed out that if the negotiations with the US fail to reach mutually beneficial results and prompt the US to lift tariffs, the EU may take countermeasures against these US imports. The European Union stated that the United States' imposition of tariffs blatantly violated the basic rules of the World Trade Organization. The goal of the European Union is to reaffirm the importance of internationally recognized rules, and no WTO member, including the United States, can unilaterally ignore these rules. European Commission President Ursula von der Leyen said that the US tariff policy has already had a negative impact on the global finance and economy.

This move by the European Union marks a new stage in the trade friction between Europe and the United States and brings a series of potential impacts on finance, economy and other aspects. The first is the direct impact on the economies of Europe and the United States. The EU's countermeasures cover most of the export products of the agricultural and manufacturing states in the United States, which will lead to the obstruction of the exports of related industries and affect employment and economic growth. For instance, the United States has a high dependence on the export of aluminium products to the European Union. The escalation of tariffs will directly increase the costs of enterprises and weaken their international competitiveness. Although the EU has alleviated some pressure through diversified supply chains, the increase in the prices of imported goods may still push up inflation and affect consumers' purchasing power. Furthermore, the uncertainty of trade frictions will restrain corporate investment and drag down economic recovery. The tariff war between Europe and the United States will force enterprises to reevaluate their supply chain layout, which may lead to the transfer of production links to other regions and increase logistics and operational costs. For instance, American aerospace manufacturers might move some of their production lines outside the European Union due to tariff pressure, which could affect the stability of the global aviation industry chain.

The second is the impact on the financial market. The escalation of tariff frictions between the EU and the US will directly lead to an increase in uncertainty in the financial market. Investors' concerns about the global economic outlook may trigger risk aversion, leading to intensified fluctuations in the stock and bond markets. For instance, US financial institutions may face an increased risk of loan default due to the rise in market uncertainty, which affects their asset quality and profitability. Tariff wars may trigger fluctuations in the exchange rates of the US dollar and the euro, increasing the costs of cross-border trade and investment. Enterprises may face higher costs when conducting foreign exchange hedging, which in turn affects their financial performance. The escalation of tariffs will lead to an increase in the costs of enterprises in the United States and the European Union, a decline in their profitability, and may increase the risk of loan default for enterprises. Financial institutions, especially those in the United States, may thus face a higher non-performing loan ratio, affecting the quality of their assets. The economic uncertainty caused by the tariff war will increase the difficulty of risk management for financial institutions. Financial institutions need to assess loan risks more carefully and may tighten credit conditions, leading to an increase in the financing costs for enterprises.

The third is the impact on the global financial system. Tariff wars may lead to a contraction in the scale of global trade and a decline in the demand for trade financing. The trade financing business of financial institutions such as banks may be impacted, affecting their sources of income. The escalation of tariffs will increase the cost and risk of cross-border investment, leading to a reduction in global cross-border investment. The cross-border business of financial institutions may thus be restrained, affecting their international layout. U.S. financial institutions may face greater pressure due to the rising risk of corporate default caused by the tariff war. The degree of dependence of EU member states on US exports varies, and the financial impact will be differentiated. Meanwhile, due to rising prices, the spending power of American consumers has dropped sharply, which is likely to further drag down and affect the retail business of financial institutions.

In conclusion, the EU's proposed escalation of tariff countermeasures against the United States will pose a significant challenge to the stability of the global financial system through financial market fluctuations and economic impacts. It is necessary to closely monitor its chain reaction and potential systemic risks.