Trump increases steel tariffs: is there a risk of a new trade war with the EU?

Trump increases steel tariffs: is there a risk of a new trade war with the EU?

On May 31, 2025, US President Donald Trump announced that he would double special tariffs on steel and aluminum imports from 25 to 50 percent. This decision came during ongoing negotiations between the EU and the US, which previously seemed to hope for an amicable solution after Trump and EU Commission President Ursula von der Leyen held talks. The EU Commission will not initially react to this announcement in order to concentrate on the negotiations.

The situation came to a head after the EU states announced counter tariffs of between 10 and 25 percent in April in response to the USA's previous tariff policy. These counter-tariffs could now affect U.S. manufacturers of jeans, motorcycles, beef and citrus fruits. Trump justifies the tariffs by arguing that he wants to correct trade imbalances and strengthen the domestic steel industry. In addition, customs revenue should be used to finance tax cuts.

Reactions to the tariff announcements

The US government justifies the tariffs on the grounds of national security, an argument that the EU cites as incompatible with World Trade Organization (WTO) rules. The European steel industry is expressing concern about possible production and job losses due to the new tariffs. In 2024, the United States was the second largest export market for European steel producers, shipping 16 percent of their exports there.

Among the companies affected is Thyssenkrupp Steel in Germany, which is less affected by the new tariffs because its main market is in Europe. This raises the question of whether the USA and the EU could not take joint action against overcapacity on the global market, in particular against price dumping from China.

The EU took the first step on March 12, 2025, when it introduced tariffs of 25 percent on imports of steel and aluminum products into the USA. The following month, the EU announced counter-tariffs that would come into force on April 1, 2025. These additional tariffs affect a wide range of American products, including bourbon whiskey, video game consoles and boats, with some tariff amounts reaching as high as 50 percent. The EU also plans to impose additional tariffs on other American agricultural and industrial products.

Global Impact and Future Outlook

According to the Institute for the World Economy (IfW), the tariffs will have only a minimal impact on the European economy, as steel and aluminum products only account for around 5 percent of EU exports. However, the impact on specific products depends heavily on demand and the availability of alternative products. For example, the German Fashion Association assumes that the impact on jeans will be small, as the import value from the USA only accounts for 0.1 percent of all jeans imports.

The possibility of a larger trade war depends on further actions by Trump, which could include tariffs on cars and other goods from the EU. However, the EU appears willing to negotiate and could consider a deal to expand American exports of liquefied natural gas (LNG). Internationally, other countries are also reacting to the situation: Canada announced new import tariffs on US products worth 29.8 billion Canadian dollars with a tariff rate of 25 percent. While Great Britain, Japan and Australia initially took no countermeasures, China announced that it would take “all necessary measures” to protect its own interests and criticized the US tariffs as violations of WTO rules.

In an increasingly complex trading landscape, it remains to be seen what steps international players will take next and how market conditions will evolve.

The information comes from sueddeutsche.de and tagesschau.de.