The ongoing tariff conflict between the United States and the European Union threatens to endanger transatlantic trade, valued at a staggering $9.5 trillion annually, warns the American Chamber of Commerce to the EU (AmCham EU).

Crucial Insights into the U.S.-EU Trade War

1. Tariff Escalation

   • The U.S. has enforced tariffs on steel and aluminium imports from Europe.
   • The European Union has outlined retaliatory measures.
   • Former President Donald Trump ignited tensions further by threatening 200% tariffs on EU wines and spirits.

2. Impact on Trade and Investment

   • AmCham EU’s Transatlantic Economy Report highlighted U.S.-EU goods and services trade hitting $2 trillion in 2024.
   • Despite rising concerns, AmCham reiterated that investment remains the backbone of the transatlantic economy.
   • U.S. foreign affiliate sales in Europe are significantly higher than U.S. exports, while European sales in the U.S. also outpace exports.

3. Potential Broader Risks

   • The conflict may extend beyond trade, impacting:
   • Services trade
   • Data flows
   • Energy markets with Europe’s dependence on U.S. LNG imports.

4. Industry Vulnerabilities

   • Countries like Ireland and Germany face exposure as intra-firm trade accounts for a significant portion of their trade volumes.

Conclusion

The escalating tariff conflict appears poised to disrupt not just trade but also investments and the next steps of data flows between these two economic giants. Investors need to stay informed using reliable resources to mitigate risks and navigate the ongoing changes.