EU-USA: Commercial partnership with uncertain future

There are considerable economic challenges for the EU coming with the beginning of Donald Trump’s second term as the President of the United States. Numerous tariff increases were announced in the USA Presidential Elections – the EU has already signalised it would react with counter measures in the same extent in case of American implementation. However, what is now the actual situation of business relations between the USA and the EU and how would the commercial power measure influence the EU?

The EU and the USA are important geopolitical and trade partners. The bilateral trade reached in 2023 the historical height with about 1,6 billions Euros. When considering the goods with the highest percentage of export in 2023, the conclusion is that the USA as sales market is especially big for some industries. More than one third (34,7%) of all pharma exports of the EU went in 2023 to the USA. In goods classification „Other vehicle categories“, which includes mainly air and space krafts, however also for instance vessels and rail vehicles, 23,3% of all EU exports went to America. At maschines this percentage was 21,5%.

How will now develop the trade relations in the second term of Donald Trump as the USA President? The situation is not clear, but the fact is that there is no winner in the possible tariff war. According to a simulation made by the Institute IW Koeln such power struggle would more affect the EU.

On the basis of strong exposure of the open EU economy towards the USA tariff politics is therefore in European interest to further cooperate with the American Government to find a mutual solution. At the same time it is important that the EU is adequately prepared in terms of geopoliticaly robust trade politics for a possible unliateral procedure of the USA.