The EU in Trump's crosshairs as tariff war expands

As of February 1, 2025, the United States introduced significant tariff increases. Imports from Canada and Mexico now face a 25% tariff, while goods from China are subject to a 10% additional tariff. However, energy resources from Canada will have a reduced tariff of 10%.

The White House has defended these measures, stating that access to the American market is a privilege and that the US remains one of the most open economies in the world.

A White House fact sheet emphasised that tariffs are a powerful tool for protecting national interests. Stating further that “President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first.”

The economic consequences of these tariffs could be severe. A new analysis by Boston Consulting Group estimates that a 60% tariff on Chinese goods, a 25% tariff on Canada and Mexico, and a 20% tariff on imports from other countries could add USD 640 billion to the cost of US imports from its top trading partners, based on 2023 US import levels.

Among the most affected sectors would be the automotive industry, which relies heavily on trade with Mexico, the EU, and Japan. Consumer electronics, electrical machinery, and fashion goods would also experience sharp increases in costs, particularly in relation to imports from China. BCG estimates that a 60% tariff rate would add USD 61 billion to the cost of importing consumer electronics products from China into the US.

Trump has made it clear that the European Union is next in line for trade penalties. Speaking to reporters, he criticised the EU’s trade practices, pointing to what he described as a USD 300 billion trade deficit and accusing the bloc of failing to reciprocate in trade relations. According to Trump, Europe benefits disproportionately by exporting millions of cars and large quantities of food and farm products to the US while not reciprocating. He insisted that tariffs on EU imports are inevitable.

In a response to these statements, a European Commission spokesperson, told CNBC Sunday that the EU believes that low tariffs promote growth and economic stability in a strong, rules-based trading system.

“However, the EU would respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods," they added.

It doesn’t stop there, Trump has also proposed imposing tariffs of up to 100% on semiconductors produced in Taiwan. On January 27, he criticised the bipartisan CHIPS Act, which has already stimulated more than USD 450 billion in investments in the country’s semiconductor and electronics sectors.

Experts warn that such tariffs could have far-reaching consequences. Stephen Ezell, Vice President for Global Innovation Policy at the Information Technology and Innovation Foundation (ITIF), argued that rather than attracting Taiwanese semiconductor firms to manufacture in the US, the policy could trigger a global trade war, which could increase raise costs for American consumers and tech companies, and strain relations with Taiwan.

The semiconductor industry has increasingly been weaponised in global trade conflicts. This is something that will be discussed during Evertiq Expo in Sophia Antipolis on February 6, when Evertiq “unpacks the future of the industry” in a discussion on stage.