EU tariff retaliation: Business strategy and global trade changes

Recently, the trade dispute between the EU and the has been escalating. The EU plans to impose additional tariffs on US goods worth 26 billion euros, with the first batch of measures likely to take effect on May 1. This dispute not only concerns the economic and trade relations between the EU and the US, but also reflects the deeper logic of global industrial chain restructuring and geopolitical competition.

direct fuse of this dispute was the US's imposition of a 25% tariff on EU steel and aluminum products and the cancellation of duty-free quotas. The's retaliation strategy presents a "precision strike" feature: the first batch of tariff list covers core US agricultural exports such as soybeans and poultry, and subsequent batches target manufacturing products as automotive parts and industrial machinery. It is worth noting that the EU's choice of retaliation in the field of agricultural products is highly targeted. 60% of US soy exports once relied on the Chinese market, but after the Sino-US trade friction, China turned to Brazil and Argentina for procurement. The EU's "purchase" of soybeans at this time not only relieves the pressure on US agriculture but also exerts pressure on the US government through the tariff lever. Data shows that the US trade deficit with EU in 2023 was about 155.8 billion US dollars, while the US had a 104 billion euro surplus in the service trade field the EU. In essence, the EU's tariff retaliation in agricultural products is to exchange concessions in the goods trade field for the initiative in the formulation of service trade rules.

hind the trade friction, there is a structural conflict between the US and the EU in the field of high-end manufacturing and digital economy. The EU's regulatory pressure on US giants continues to increase, and at the beginning of 2025, it has imposed a fine of 500 million euros on Apple and a fine of 20 million euros on Meta, based on the anti-monopoly constraints on "gatekeeper" companies stipulated in the Digital Markets Act. The US, on the other hand, the EU's automotive industry with tariffs in the name of "national security". The automotive industry accounts for 8% of Germany's GDP, and its contribution rate to economies of France, Italy, and other countries is also more than 5%. The EU's retaliation strategy presents a "two-way" feature: on the one hand it protects the domestic automotive supply chain through tariffs, and on the other hand, it accelerates the promotion of the Chip Act and the Hydrogen Alliance, trying to establish a nonUS technology ecology in emerging fields such as new energy and semiconductors.

The deep-seated cause of the escalation of trade friction is the EU's strategic adjustment the global supply chain layout. The EU is considering purchasing an additional 56 billion US dollars of US liquefied natural gas (LNG) and agricultural products in exchange for US's concession on tariffs. Behind this "buying for talks" strategy, the EU is taking "opportunistic" advantage of the Sino-US trade: China imposed a 49% tariff on US LNG from February 2025, resulting in the disappearance of US LNG exports to China, and the EU the key role to fill the market gap. However, the EU's balancing act faces multiple risks. The German Economic Research Institute estimates that if a full-scale tariff war breaks between the US and the EU, the EU's GDP will decrease by 0.25%, and Germany's decrease may reach 0.33%. hedge risks, the EU is accelerating the Global Gateway Plan, planning to invest 300 billion euros in Africa, Latin America, and other regions from 2025 2030 to build a non-US-dominated industrial chain.

The escalation of trade friction between the United States and Europe essentially represents a shift in the global trade governance system from "rule-based" "power-based" competition. Following the paralysis of the WTO's Appellate Body, both the United States and Europe have resorted to unilateral tariff hikes domestic legislation, leading to a 3%-5% increase in global trade costs. In its latest retaliatory measures, the European Union has for the first time invoked the "strument to Counter Undesirable Economic Subjects", allowing for measures such as procurement restrictions and trade barriers in services against countries attempting to coerce member states with economic pressure marking the beginning of a "rules alliance" among regional trade blocs to counter unilateralism. For global businesses, the trade friction between the United States and Europe will accelerate theregionalization" restructuring of supply chains. German automaker BMW has announced the transfer of some of its electric vehicle production capacity to Mexico to avoid the high tariffs imposed by the United on European cars; French cosmetics giant L'Oréal, meanwhile, has increased its research and development investment in Southeast Asia to reduce reliance on the U.S. and European.

The escalation of the EU's tariff countermeasures against the United States is not only a game of short-term economic interests but also a reshaping of long-term strategic landscape. In this dispute, there are no absolute winners: American farmers will bear the cost of blocked soybean exports, European automakers face pressure to restructure supply chains, and global consumers will have to foot the bill for the price hikes caused by trade friction. Finding a balance between protectionism and multilateral cooperation will become the core question global economic governance in the future.