On April 2, 2025, the United States is set to impose sweeping new tariffs on imports from the European Union. While the administration frames this move as a corrective step against what it perceives as unfair trade practices, the economic consequences could ripple across both sides of the Atlantic, affecting supply chains, costs, and the stability of key sectors.
Since returning to the White House, President Donald Trump has reaffirmed his commitment to recalibrating the United States’ trade relationships. In his view, the imbalance extends beyond strategic rivals such as China and Mexico, including long-standing allies like Canada and the EU. At the heart of the president’s rhetoric lies the conviction that current trade arrangements place American industry at a structural disadvantage.
One of the most frequently cited examples is the automotive sector: while the EU levies a 10% tariff on American cars, the United States imposes only a 2.5% duty on European vehicles. Citing this disparity, Trump has revived a protectionist approach to trade, making the imposition of new tariffs on foreign goods one of the first key moves of his second term.
Set to take effect on April 2nd, the tariffs could mark a turning point in transatlantic economic relations. At a time when global supply chains are already under pressure and geopolitical tensions are reshaping trade flows, European companies now face the tangible risk of losing ground in one of their most important export markets.
This article examines the sectors most likely to be affected by the new U.S. tariffs and assesses the broader economic implications for businesses and economies on both sides of the Atlantic.
Sector-by-Sector Analysis: Who Gets Hit the Hardest?
Automotive Industry
Few sectors are as exposed as the automotive industry. European automakers export over one million vehicles annually to the United States, making the U.S. one of their largest markets. With the implementation of 25% tariffs, cars produced in Germany, Italy, and France will become significantly more expensive for American buyers.
German manufacturers are particularly vulnerable, as the U.S. is the second-largest export market for brands like BMW, Mercedes-Benz, and Volkswagen. While some of these companies operate assembly plants in the U.S. (thus avoiding the import tax), many luxury models are still made in Europe and shipped overseas.
Additionally, American manufacturers like Tesla, which depend on European components, could see their production costs increase.
Steel and Aluminum
The metals sector is another major casualty, being it already affected by high energy prices and weakening demand. European steel and aluminum producers now face the reimposition of 25% and 10% tariffs, respectively.
Major producers like ArcelorMittal and Thyssenkrupp will struggle to maintain their market share in the U.S., potentially leading to production cuts and job losses. Meanwhile, American manufacturers who rely on imported metal inputs may see rising costs, which could be passed on to consumers.
Agri-Food and Beverages
Agriculture and food processing are among the most symbolically and economically sensitive sectors in transatlantic trade. Products like French wine, Italian cheese, Spanish olive oil, and German sausages have become common staples in U.S. specialty markets. Under the new tariffs, these goods will face an additional 25% duty, making them significantly more expensive for U.S. importers and consumers.
U.S. businesses will also suffer. Restaurants, retailers, and distributors dependent on European specialty products will be forced to either absorb the higher costs or replace iconic brands with lower-quality substitutes.
Chemicals and Pharmaceuticals
Less visible to the average consumer but critically important to the global economy are the chemical and pharmaceutical sectors. Europe is a major supplier of industrial chemicals and pharmaceutical ingredients to the U.S. market, particularly from Germany and Ireland.
New tariffs on these goods would disrupt supply chains for U.S. manufacturers and potentially delay the production of everything from plastics and fertilizers to medicines and vaccines. Some pharmaceutical companies are maintaining dual production sites to hedge against such risks. However, a sudden shift in trade conditions could still create bottlenecks and increase costs.
Luxury Goods and Fashion
While not essential, luxury goods from Europe represent a substantial portion of high-end consumer spending in the U.S. Companies like LVMH, Kering, and Richemont derive up to 25% of their global revenues from North America. A 25% tariff would either lead to higher retail prices or slimmer profit margins, potentially dampening sales. That said, the sector’s high margins may allow companies to absorb the hit more effectively than other industries.
Sources :
US to announce 25% tariff on EU very soon, Trump says | Reuters
Many European firms exposed to possible US tariffs – Hindustan Times
Even White House aides fear the fallout of Trump’s April 2 tariffs – POLITICO