President Trump has threatened to slap tariffs on Europe (Image: Getty)
A trade war between the US and Europe could hit low-income households and cause an unemployment spike, experts have warned.
has threatened to slap tariffs on goods from Europe after accusing countries in the of not importing their fair share of US products.
The President described the trade deficit between America and the 27-nation bloc, which was estimated to be over £109 billion ($131 billion) in 2022, as “an atrocity” and promised that members .
The prospect of substantial tariffs on goods entering the US has sent shockwaves through Europe – especially in EU economies where America accounted for 19.7% of total exports in 2023, making them the bloc’s largest trading partner.
Robert Basedow, an associate professor at the European Institute of the London School of Economics and Political Science, said he wouldn’t be surprised if Mr Trump attached similar tariffs to EU goods as the 25% charge proposed for Mexico and Canada this week.
Such a move would mean “lower EU exports, resulting in higher strains on public budgets and unemployment rates, and a further slowdown in EU GDP growth,” he told the state-owned broadcaster .
:
US tariffs on European goods would harm low-income shoppers, experts warn. (Image: Getty)
“I think pretty much all European countries [would be] affected, but the one that really stands out would be because they have by far the largest surplus and the largest exports towards the US – and those exports are concentrated in cars, machinery, pharmaceuticals and chemicals,” Mr Basedow added.
German products, including Volkswagen cars, have already been put in a precarious position by the proposed US tariffs on , where the manufacturer’s largest factory is based.
Economist Julian Jessop also warned that while tariffs can be effective in reducing imports, they could also leave society’s worst-off the most out of pocket.
“Free trade allows consumers to buy at the lowest price from the best producers and maximises growth and competition,” he wrote in The Telegraph. “The more effective tariffs are in reducing imports, the less revenue they will raise. And the money they do raise will come mainly from low-income households while damaging longer-term growth.”
After Mr Trump imposed 10% tariffs on this week and backtracked on a 25% tariff on goods from Mexico and Canada at the last minute, EU leaders know that his threats should not be taken lightly.
Don’t miss… [INISGHT] [REPORT]
The US President announced 10% tariffs on goods from China this week. (Image: Getty)
While the President has not specified when new trade rules on European goods will be announced, he has accused EU countries of not buying their fair share of US-produced cars and farm products, telling reporters: “They take almost nothing—and we take everything from them.”
Warning that US citizens could expect “a little pain” in the short term, he said the new measures were necessary to respond to America being “ripped off by virtually every country in the world.”
EU leaders have said they would respond to a tariff rise with new charges. French President Emmanual Macron suggested that Mr Trump’s declarations would only cause European states to become “stronger and more united”.
UK politicians have suggested that the country could also dodge being hit by damaging tariffs because it doesn’t have a trade deficit with America. Mr Trump also told the that while Britain was “out of line” on the trading front, he thought a deal could be “worked out” with the UK Government.
The Prime Minister told reporters this week that discussions with the President had focused on the benefits of a “strong trading relationship”. He added that it was in “the best interests of the UK” to “not choose between” the US and the EU, stressing that “both are important to us”.