Europe, you’re next.
That’s the latest message from President Trump, who has repeatedly said in recent days that he would slap punitive tariffs on the 27 members of the European Union.
Tariffs “will definitely happen with the European Union,” Mr. Trump told the BBC Sunday evening, and they are coming “pretty soon.” He doubled down on the threat on Monday, complaining about deficits in auto and farm products, hours before new tariffs were expected go into effect on imports from Canada and China, with Mexico getting a one-month delay.
“The European Union has abused the United States for years, and they can’t do that,” Mr. Trump said on Monday.
A head-spinning blitz of executive orders and policy reversals related to international trade, aid and agreements has come out of the White House in the past two weeks. But one common thread is that Mr. Trump has directed the harshest penalties at some of America’s closest economic and military allies.
One reason is that the United States has large trade deficits with Mexico, Canada and the European Union in addition to China, said Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations.
“Trump is obsessed with trade deficits,” she said. And he may be “starting with the places where he feels he will have quick wins.”
Of course, trade surpluses are not necessarily any indication of a country’s economic health. The last time the United States had an overall trade surplus was 1975, when the American economy was still in a severe recession.
The United States did have a trade surplus in 2023 with Britain, according to the U.S. Bureau of Economic Analysis. And that may help Britain avoid tariffs. “I think that one can be worked out,” Mr. Trump said, contrasting Britain with Europe.
As for the European Union, Mr. Trump has characterized the bloc’s trade practices as an “atrocity.” But tariffs imposed by the United States and the European Union on each other are pretty similar.
“The pattern of protectionism between the U.S. and Europe is very even, and there is absolutely no evidence that the U.S. has been taken advantage of,” said Kimberly Clausing, an economist at the Peterson Institute for International Economics in Washington. “This claim is disingenuous.”
Products exported from the United States to the European Union are on average subject to a 3.95 percent tariff, according to ING Global Markets Research. A 3.5 percent tariff on average is added to products from the European Union that head west across the Atlantic.
The disparities, however, are bigger on some items, like cars. The European Union tariff is 10 percent, compared with 2.5 percent from the United States. And E.U. tariffs on food and beverages are on average 3.5 percent higher than those set by the United States. Mr. Trump has long complained about both sectors.
The United States is the No. 1 buyer of E.U. exports, accounting for nearly 20 percent of the total in 2023, according to Eurostat. The bloc’s surplus on goods was roughly $160 billion; there was a $107 billion deficit on services.
Mette Frederiksen, Denmark’s prime minister, said Monday that she would “never support fighting allies,” but that “if the U.S. puts tough tariffs on Europe, we need a collective and robust response.”
Donald Tusk, Poland’s prime minister, said, “We have to do everything to avoid it — totally unnecessary and stupid tariff war or trade wars.”
For month, European leaders have quietly been preparing how to respond. Business leaders and trade associations are warning that the brewing trade war and the unpredictable way in which it is being waged could slow investment. American tariffs on European goods would also hurt companies when they were weakened by flagging demand at home and in China.
The U.S. Chamber of Commerce to the European Union issued a statement on Monday criticizing potential tariffs, arguing that they would invite retaliation and cause companies on both sides of the Atlantic to suffer.
German business leaders were reluctant on Monday to comment on the possibility of tariffs on Europe, but they reacted with a mixture of concern and resignation to those targeting Mexico and Canada.
“German industry is directly affected by the tariffs, as it also supplies the U.S. market from plants in Mexico and Canada,” said Wolfgang Niedermark, a board member of BDI, a German industry lobby group. “The automotive industry and its suppliers, including the chemical industry as a supplier of chemical raw materials, will be hit much harder than other sectors.”
Many of the 2,100 German companies that have operations in Mexico, including BMW, Volkswagen and Audi, chose to build there after Mr. Trump signed a trade agreement with Mexico and Canada during his first term, when threat of tariffs against Germany loomed.
Nearly a quarter of the 1.3 million vehicles that German automakers sold in the United States last year were produced in Mexico. In addition to the car companies, a web of auto parts suppliers, such as Bosch and ZF, have research and production plants there.
Asian and European stock markets fell on Monday, with some of the biggest drops in share prices among auto manufacturers.
Economists at the Prognos Institute in Switzerland calculated that 1.2 million jobs in Germany were dependent on exports to the United States, and that as many as 300,000 of them could be endangered if tariffs against Europe came into effect.
Europe’s luxury industry has also been bracing for a hit. In 2019, the United States briefly imposed 25 percent tariffs on French wines and Italian cheeses, as well as luxury leather handbags and luggage from brands like Louis Vuitton and Gucci.
Bernard Arnault, the head of the LVMH Moët Hennessy Louis Vuitton empire, has sought to cultivate direct ties with Mr. Trump, who personally invited him to attend last month’s inauguration in Washington. At an earnings presentation last week, Mr. Arnault said that by lowering the corporate tax to 15 percent and “welcoming you with open arms,” Mr. Trump was making the United States more attractive for companies.
There can be reasons for a country to worry about too large a trade deficit, said Ms. Clausing, the Peterson Institute economist. But the United States is not facing those problems at the moment.
The trade deficit signals that American consumers are getting a lot of stuff from the rest of the world, she explained. If tariffs drive up prices and Americans have to pay more, as most economists expect, their standard of living will go down.
Liz Alderman contributed reporting from Paris, Melissa Eddy from Berlin and Jeanna Smialek from Brussels.
