US-EU trade tensions 'to heighten economic uncertainty' as EU trade commissioner urges 'respect not threats' from US
A trader works on the floor of the New York Stock Exchange in New York, the United States, on Feb. 3, 2025. U.S. stocks ended lower on Monday, as investors reacted to the Donald Trump administration’s planned tariff rollout. The Dow Jones Industrial Average fell 122.75 points, or 0.28 percent, to 44,421.91. The S&P 500 sank 45.96 points, or 0.76 percent, to 5,994.57. The Nasdaq Composite Index shed 235.49 points, or 1.20 percent, to 19,391.96. (Photo by Michael Nagle/Xinhua)
Concerns over a US-EU trade war have been rising over the weekend as the US threatened to impose a 50 percent tariff on the EU and the bloc refused to back down, shaking global markets.
The US-EU trade tensions will add more economic uncertainty to the world, a Chinese expert said, adding that there is ample evidence showing that unilateralism benefits no one and only causes harm to all parties involved, including the US itself.
The EU trade commissioner, Maroš Šefčovič, has struck a defiant tone on Friday after the US President Donald Trump threatened to place 50 percent tariff on all goods from the bloc, saying any potential trade deal between Brussels and Washington must be based on “respect not threats,” The Guardian reported on Saturday.
After a call with the US trade representative Jamieson Greer and the commerce secretary Howard Lutnick, the EU’s trade chief posted on X: “The EU’s fully engaged, committed to securing a deal that works for both.”
Speaking on Truth Social on Friday, the US president claimed that “the EU, which was formed for the primary purpose of taking advantage of the US on TRADE, has been very difficult to deal with,” citing the EU’s corresponding moves targeting the US companies and the trade deficit with the US.
“Our discussions with them are going nowhere! Therefore, I am recommending a straight 50 percent Tariff on the EU, starting on June 1, 2025,” he said.
But later Friday, at an executive order signing in the Oval Office, the US president escalated his message to the EU – “I’m not looking for a deal,” he said. “We’ve set the deal – it’s at 50 percent,” CNN reported.
The tariff threat came amid stalled negotiations, with Washington demanding unilateral concessions from Brussels to open up to US business, while the EU has been seeking an agreement that offers mutual gain, Reuters reported, citing people familiar with the EU-US trade talks.
The US president’s latest remarks follow his April 2 “Liberation Day” announcement of a 39 percent tariff on European goods, an idea he later walked back before he changed course again Friday with an even tougher stance, NBC News reported on Saturday.
US Treasury Secretary Scott Bessent said Friday he hopes a new tariff threat from the president would speed along talks with the EU regarding a new trade deal, the Hill reported.
In a Friday interview with Fox News, Bessent accused the EU of not engaging in “good faith” trade negotiations with the White House.
Commenting on the current situation between the US and the EU over tariff dispute, Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Sunday that the US seems eager to ramp up pressure on the EU, possibly due to growing concerns about its domestic economy. “It may hope to shift the dynamics by pushing for faster progress in negotiations with the bloc,” he said.
However, Zhou said such pressure is unwise. “The US government may have once felt confident about winning concessions from the EU, but history has shown that tariff increases have had significant negative effects on both sides. Especially given the current economic situation, if the US government chooses to exert more pressure on Europe now, it may only provoke greater resentment from the EU and could also increase pressure on American businesses,” the expert said.
Market response
The ongoing trade dispute between the US and the EU has drawn widespread attention, with the market concern over the tit-for-tat tensions between the two global powers and their potential impact on global markets.
US stocks fell after the US government threatened 50 percent tariffs on the EU that could begin in a little more than a week. The S&P 500 lost 0.7 percent Friday and had its worst week in the last seven, AP News reported. The Dow Jones Industrial Average dropped 0.6 percent, and the Nasdaq composite sank 1 percent.
Moreover, the three major European stock market indexes fell on Friday. The benchmark STOXX 600 index was down 0.93 percent. Germany’s DAX fell by 1.54 percent and France’s CAC index slid 1.65 percent.
The US was the largest partner for EU exports of goods in 2024, making up 20.6 percent of exports, according to Eurostat, the EU’s statistical office. Petroleum oils, medicinal and pharmaceutical products were the EU’s most exported group to the US last year, according to the data.
Given the scale of trade between the US and the EU, the tariff tensions could add further uncertainty to global trade, experts said.
While it is difficult to predict the outcome of future US-EU tariff negotiations, Zhou said that it’s certain that the current unpredictability – driven by tit-for-tat rhetoric – is putting stress on businesses on both sides, including American companies.
“This uncertainty makes it difficult for American businesses to make decisions,” said Zhou, noting that as a result, many companies may be forced to pause operations, draw down inventory, and wait for clarity.
On a further note, the Chinese expert said this uncertainty also makes other countries more cautious in doing business with the US, as they are likely to worry about sudden tariff changes and, in some cases, may even choose to shift to alternative trade partners. “This could lead to a reshaping of global supply chains,” Zhou warned.
Wide concerns
The latest concerns over the tariffs were also shared by some European countries’ officials. European politicians said they were disappointed by the news of further tariffs from the US. The French trade minister, Laurent Saint-Martin, said the US’ new threats did nothing to help negotiations, The Guardian reported.
“We are maintaining the same line: de-escalation, but we are ready to respond,” he wrote on X.
Irish Taoiseach Micheál Martin described the US proposal of imposing 50 percent tariffs on the EU as “extremely disappointing.” “I have always been clear in my view that tariffs are damaging to all sides,” he said.
In a statement shared on X, Martin said that “Tariffs at the level suggested would not only push prices up, they would grievously damage one of the world’s most dynamic and significant trading relationships, as well as disrupting wider global trade.”
Huo Jianguo, a vice chairman of the China Society for World Trade Organization Studies in Beijing, told the Global Times on Sunday that the EU is one of the US’ largest economic partners and remains a significant global power and the US’ threat of a 50 percent tariff reflects its eagerness to reach a deal with the EU.
“However, given its current position, it is very unlikely that the EU will easily back down. Instead, the EU might adopt some countermeasures, if the 50 percent tariffs take place, which could further escalate the situation,” Huo said.
The US government’s tariff policy is also facing a lack of public trust among many Americans. A Harris Poll for Bloomberg News found that a majority of US adults, 56 percent, said their household finances would be better off if the US tariffs had not been implemented. Some 52 percent of respondents said the promised benefits of the levies would not be worth their economic cost, Bloomberg reported on Saturday.
Commenting on the tariff policy, Huo said any decision that leads to rising trade tensions could significantly disrupt existing trade and investment flows – not only between the EU and the US, but globally – potentially dealing a heavy blow to the world economy.
World Economic Situation and Prospects as of mid-2025 recently released by the UN mentioned that higher tariffs and trade policy uncertainty have weakened the global economic outlook for 2025, posing multiple challenges to the world, especially developing economies.